Organizational Behavior 13th Edition Don Hellriegel John W. Slocum Jr.
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Organizational Behavior 13th Edition Don Hellriegel Texas A & M University John W. Slocum, Jr. Southern Methodist University Organizational Behavior, Thirteenth Edition Don Hellriegel & John W. Slocum, Jr. VP Editorial, Director: Jack W. Calhoun Editor-in-Chief: Melissa Acuña © 2011, 2009 South-Western, Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution, information storage and retrieval systems, or in any other manner—except as may be permitted by the license terms herein. 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To Lois (DH) To Gail (JWS) Brief Contents Preface xix Part 1: Introduction and Ethical Foundations 1 Chapter 1 Chapter 2 Learning about Organizational Behavior 2 Individual and Organizational Ethics 32 Part 2: The Individual in Organizations 67 Chapter Chapter Chapter Chapter Chapter Chapter 3 4 5 6 7 8 Understanding Individual Differences 68 Perceptions and Attributions 102 Learning Concepts to Improve Performance 130 Motivating Employees 156 Motivation: Goal Setting and Reward Programs 190 Workplace Stress and Aggression 218 Part 3: Leadership and Team Behaviors 251 Chapter Chapter Chapter Chapter Chapter 9 10 11 12 13 Interpersonal Communication in Organizations 252 Leadership Effectiveness: Foundations 288 Leadership Effectiveness: New Perspectives 318 Developing and Leading Teams 346 Managing Conflict and Negotiating Effectively 382 Part 4: The Organization 411 Chapter Chapter Chapter Chapter 14 15 16 17 Managerial Decision Making 412 Organization Design 444 Cultivating Organizational Culture 476 Managing Organizational Change 508 Part 5: Integrating Cases 541 Case Case Case Case Case Case Case Case Case 1 2 3 4 5 6 7 8 9 A Day in the Life of Yolanda Valdez 542 Alan Mulally, CEO, Ford Motor Company 543 Conflict Resolution at General Hospital 545 Bob Knowlton 547 BMW’s Dream Factory and Culture 550 ROWE Program at Best Buy 553 Whole Foods Market 555 The Road to Hell 559 How Personal Can Ethics Get? 562 Appendix: BizFlix A-1 References R-1 Subject and Organizational Index I-1 Author Index I-19 Contents Preface xix Part 1: Introduction and Ethical Foundations 1 Chapter 1 Learning about Organizational Behavior 2 Learning from Experience: Indra Nooyi, Chairmain and CEO, PepsiCo 3 Leadership versus Management 4 Learning Framework 5 The Individual in Organizations 6 Leaders and Teams in Organizations 7 The Organization Itself 8 Competencies for Individual, Team, and Organizational Effectiveness 8 Ethics Competency 10 Key Attributes 10 Ethical Dilemmas 10 Ethics Competency: Robert A. Eckert, Chairman and CEO, Mattel, Inc. 11 Self Competency 12 Key Attributes 12 Self Competency: Indra Nooyi’s Development Journey 12 Career Development 13 Diversity Competency 14 Key Attributes 14 Categories of Diversity 15 Diversity Competency: Aetna’s Diverse Discoveries Program 17 Across Cultures Competency 17 Key Attributes 18 Avoiding Stereotypes 18 Across Cultures Comeptency: Carlos Ghosn, CEO, Nissan-Renault 18 Communication Competency 19 Key Attributes 19 Communication Competency: Maureen Chiquet, Global CEO, Chanel S.A. 20 Teams Competency 21 Key Attributes 21 Teams and Individualism 22 Teams Competency: Grand Reid, President, Mars Drinks 22 Change Competency 23 Key Attributes 23 Change Competency: Indra Nooyi Leads Change at PepsiCo 24 Blur: Constant Change 24 Chapter Summary 25 Key Terms and Concepts 26 Discussion Questions 26 Experiential Exercise and Case 27 Experiential Exercise: Self Competency—Key Competencies Self-Assessment Test 27 Case: Diversity Competency—Accenture's Work–Life Balance Programs 29 viii Contents Chapter 2 Individual and Organizational Ethics 32 Learning from Experience: Anne Mulcahy, Chairman and Former CEO of Xerox, Commits to Business Ethics 33 Individual Differences and Ethics 34 Stages of Moral Development 34 Moral Intelligence 36 Ethics Competency: Anne Mulcahy’s Ethical Leadership 36 Decision Making and Ethics 37 Ethical Intensity 38 Ethics-Based Principles 39 Concern for Affected Individuals 43 Benefits and Costs 44 Determination of Rights 46 Procedural and Interactional Justice 46 Change Competency: James McNerney, CEO of Boeing 47 Diversity and Ethics 49 Diversity and Ethical Cultures 49 Increasing Diversity as Opportunity 49 Generation Diversity and Ethics 50 Sexual Harassment 52 Diversity Competency: Verizon’s Workplace Diversity 54 Stakeholder Responsibility and Ethics 55 Stakeholder Pressures 56 Ethics Competency: Johnson & Johnson’s Stakeholder Ethics and Principles 57 Sustainable Development 58 Assessing Responsibility to Stakeholders 60 Chapter Summary 62 Key Terms and Concepts 63 Discussion Questions 63 Experiential Exercise and Case 64 Experiential Exercise: Ethics Competency—What Is Your Decision? 64 Case: Diversity Competency—Consensual Relationship Agreements 65 Part 2: The Individual in Organizations 67 Chapter 3 Understanding Individual Differences 68 Learning from Experience: Steve Jobs at Apple 69 Bases of Personality 70 Heredity 71 Environment 72 Self Competency: David Neeleman of JetBlue 76 Personality and Behavior 77 Big Five Personality Factors 77 Self-Esteem 81 Locus of Control 82 Emotional Intelligence 83 Teams Competency: Why Personality Is Important at Starbucks 84 Work-Related Attitudes 85 Components of Attitudes 86 Attitudes Affecting Job Performance 86 Across Cultures Competency: Mercedes-Benz 90 Diversity Competency: Deloitte & Touche 92 Emotions at Work 93 A Model of Emotions 93 Cross-Cultural Differences 95 Contents Chapter Summary 96 Key Terms and Concepts 97 Discussion Questions 97 Experiential Exercises and Case 97 Experiential Exercise: Self Competency—What Are Your Cultural Values? 97 Experiential Exercise: Self Competency—What's Your Emotional IQ? 99 Case: Self Competency—Larry Ellison at Oracle Computer 100 Chapter 4 Perceptions and Attributions 102 Learning from Experience: Jim Sinegal, Cofounder and CEO of Costco 103 Perceptual Process 104 Across Cultures Competency: McDonald’s Use of Feng Shui 106 Perceptual Selection 107 External Factors 107 Communication Competency: Hand Gestures 109 Internal Factors 109 Person Perception 111 The Perceived 111 The Perceiver 112 The Situation in Foreign Assignments 112 Self Competency: Doing Business in Arab Countries 114 Perceptual Errors 114 Perceptual Accuracy 114 Perceptual Defense 115 Stereotyping 115 Halo Effect 116 Projection 117 Impression Management 117 Attribution Process 119 Making Attributions 120 Internal versus External Causes of Behavior 120 Ethics Competency: The Gap 123 Attributions of Success and Failure 124 Chapter Summary 126 Key Terms and Concepts 126 Discussion Questions 126 Experiential Exercise and Case 127 Experiential Exercise: Self Competency—The Perception Process 127 Case: Self Competency—Joan Murphy 128 Chapter 5 Learning Concepts to Improve Performance 130 Learning from Experience: Working at United Parcel Service 131 Learning Through Rewards and Punishments 133 Classical Conditioning 133 Operant Conditioning 134 Contingencies of Reinforcement 135 Positive Reinforcement 136 Self Competency: Coming to Work Today? 138 Organizational Rewards 139 Negative Reinforcement 139 Extinction 140 Punishment 141 Ethics Competency: Time Off for Bad Behavior 143 Insights for Leaders 144 Schedules of Reinforcement 145 Continuous and Intermittent Reinforcement 145 Fixed Interval Schedule 146 ix x Contents Across Cultures Competency: Flowers: A Symbol of Love? 146 Variable Interval Schedule 147 Fixed Ratio Schedule 147 Variable Ratio Schedule 148 Social Learning Theory 149 Symbolizing 149 Forethought 149 Vicarious Learning 150 Self-Control 150 Teams Competency: Steelcase Inc. 151 Self-Efficacy 151 Insights for Leaders 152 Chapter Summary 153 Key Terms and Concepts 154 Discussion Questions 154 Experiential Exercise and Case 154 Experiential Exercise: Self Competency—What Is Your Self-Efficacy? Case: Self Competency—Joe Salatino, President of Great Northern American 155 Chapter 6 Motivating Employees 156 Learning from Experience: Working at Starbucks 157 Motivational Processes 158 Core Phases 159 Insights for Leaders 160 Satisfying Human Needs 161 Needs Hierarchy Model 161 Learned Needs Model 163 Self Competency: John Schnatter of Papa John’s Pizza 167 Insights for Leaders 168 Designing Jobs 169 Motivator–Hygiene Model 169 Motivator Factors 169 Hygiene Factors 169 Job Characteristics Model 170 Insights for Leaders 173 Teams Competency: SEI Investments 174 Cultural Influences 174 Influencing Performance Expectations 175 Expectancy Model 175 Insights for Leaders 179 Communication Competency: Intuit 180 Ensuring Equity 180 Equity Model: Balancing Inputs and Outcomes 180 Ethics Competency: How Tempted Are You? 182 Procedural Justice: Making Decisions Fairly 183 Insights for Leaders 185 Chapter Summary 185 Key Terms and Concepts 186 Discussion Questions 187 Experiential Exercise and Case 187 Experiential Exercise: Self Competency—What Do You Want from Your Job? 187 Case: Communication Competency—SAS Institute 188 154 Contents Chapter 7 Motivation: Goal Setting and Reward Programs 190 Learning from Experience: Enterprise Rent-A-Car 191 Model of Goal Setting and Performance 192 Importance of Goal Setting 192 Challenge 194 Teams Competency: Jeff Gordon’s Rainbow Warriors 196 Moderators 197 Mediators 199 Performance 200 Across Cultures Competency: Hewlett-Packard 200 Rewards 201 Satisfaction 201 Consequences 202 Effects of Goal Setting 202 Conditions for Effective Goal Setting 202 Impact on Performance 203 Diversity Competency: Lockheed Martin MS2 Team 203 Limitations to Goal Setting 204 Insights for Leaders 205 Rewards Programs for Improving Performance 205 Informal Programs 207 Profit-Sharing Programs 207 Change Competency: Nucor’s Profit-Sharing Program 208 Skill-Based Pay Programs 209 Flexible Benefit Programs 209 Insights for Leaders 210 Reward Practices in Different Cultures 212 Chapter Summary 213 Key Terms and Concepts 214 Discussion Questions 214 Experiential Exercise and Case 214 Experiential Exercise: Self Competency—Goal Setting 214 Case: Diversity Competency—Allstate Insurance Company 215 Chapter 8 Workplace Stress and Aggression 218 Learning from Experience: Stress and Coping with a Layoff 219 Concept of Stress 221 Fight-or-Flight Response 221 Influences on the Stress Experience 222 Primary Stressors 223 Work-Related Stressors 223 Communication Competency: Workplace Incivility: How Not to Communicate 225 Life Stressors 226 Severe Stress 228 Impacts on Health 228 Impacts on Performance 229 Impacts on Job Burnout 230 Individual Differences and Stress 231 The Type A Personality 232 The Hardy Personality 233 Self Competency: Chesley B. Sullenberger III, Captain of US Airways Flight 1549 234 Stress Management 235 Insights for Individuals 236 Insights for Leaders 236 xi xii Contents Change Competency: Ortho-Clinical Diagnostics’ Wellness Program 238 Workplace Aggression 239 Self-Serving Biases 239 Workplace Bullying 240 Sexual Harassment 243 Workplace Violence 244 Diversity Competency: Darwin Realty 246 Aggression toward the Organization 247 Chapter Summary 247 Key Terms and Concepts 248 Discussion Questions 249 Experiential Exercise and Case 249 Experiential Exercise: Self Competency—Work-Related Stress Inventory 249 Case: Ethics Competency—Coleen Colombo and Colleagues Resist Mortgage Fraud 250 Part 3: Leadership and Team Behaviors 251 Chapter 9 Interpersonal Communication in Organizations 252 Learning from Experience: Julia Stewart, Chairman and CEO of DineEquity 253 Elements of Interpersonal Communication 254 Sender and Receiver 254 Transmitters and Receptors 255 Messages and Channels 255 Media Richness 256 Meaning and Feedback 257 Interpersonal Barriers 258 Ethical Interpersonal Communications 260 Communication Openness 261 Constructive Feedback 262 Appropriate Self-Disclosure 264 Active Listening 264 Change Competency: Susan Powers, Chief Information Officer, Travelport GDS 266 Nonverbal Communication 267 Types of Nonverbal Cues 267 Communication Competency: Poor Nonverbal Signals Prior to Layoffs 269 Status Differences 270 Intercultural Communication 270 Cultural Barriers 270 Across Cultures Competency: Tahir Ayub, Partner, PwC 273 Nonverbal Differences 273 Interpersonal Communication Networks 276 Individual Network 276 Informal Group Network 278 Formal Employee Network 278 Change Competency: Michael Ward’s Reflections on CSX’s One Plan Redesign 279 Impacts of E-Mail 280 Impacts of Text and Instant Messaging 281 Chapter Summary 282 Key Terms and Concepts 283 Discussion Questions 284 Experiential Exercise and Case 284 Experiential Exercise: Communication Competency—Communication Inventory 284 Case: Communication Competency—Xographics 286 Contents Chapter 10 Leadership Effectiveness: Foundations 288 Learning from Experience: Douglas Conant’s Leadership at Campbell Soup Co. 289 Power and Political Behavior 290 Leaders’ Use of Power 290 Political Behavior in Organizations 293 Insights for Leaders 295 Change Competency: Carol Bartz’s Use of Power to Change Yahoo! 296 Legacy Leadership Models 297 Traits Model of Leadership 297 Theory X and Theory Y Model 298 Behavioral Model of Leadership 300 Self Competency: Colin Powell’s “Lessons in Leadership” 303 Situational Leadership® Model 304 Leadership Styles 304 Situational Contingency 305 Choosing a Leadership Style 306 Communication Competency: Paul Millman, CEO, Chroma Technology 306 Insights for Leaders 307 Vroom–Jago Leadership Model 308 Leadership Styles 308 Situational Variables 308 Solution Matrix 309 Ethics Competency: The Bank CEO 310 Insights for Leaders 311 Chapter Summary 312 Key Terms and Concepts 313 Discussion Questions 313 Experiential Exercise and Case 313 Experiential Exercise: Self Competency—Personal Power Inventory 313 Case: Diversity Competency—Women on Corporate Boards 315 Chapter 11 Leadership Effectiveness: New Perspectives 318 Learning from Experience: John W. Thompson, Chairman of Symantec 319 Transactional Leadership 320 Core Components 321 Insights for Leaders 321 Change Competency: Mark Hurd, CEO, Hewlett-Packard 322 Leader–Member Exchange 323 Core Components 323 Insights for Leaders 325 Authentic Leadership 326 Core Components 326 Insights for Leaders 328 Self Competency: Lessons for Leading in a Crisis 328 Transformational Leadership 329 Core Components 330 Insights for Leaders 332 Ethics Competency: Ruben Vardanian, CEO of Russia’s Troika Dialog 333 Global Leadership and Organizational Behavior Effectiveness 335 Core Components 336 Insights for Leaders 339 Across Cultures Competency: Culture and Leadership in Mexico 339 Chapter Summary 340 Key Terms and Concepts 341 Discussion Questions 341 xiii xiv Contents Experiential Exercise and Case 342 Experiential Exercise: Self Competency—GLOBE Leader Behaviors Instrument 342 Case: Change Competency—Sir Richard Branson, Chairman, Virgin Group, Ltd. 344 Chapter 12 Developing and Leading Teams 346 Learning from Experience: Boeing’s Development of Teams and Their Leaders 347 Introduction to Groups and Teams 348 Classifications of Groups 348 Informal Group 348 Team 349 Effective Teams 350 Team Empowerment 350 Teams Competency: Empowered Teams at W. L. Gore & Associates 351 When to Use Teams 352 Stages of Team Development 353 Forming Stage 354 Storming Stage 354 Norming Stage 354 Performing Stage 355 Adjourning Stage 355 Types of Work-Related Teams 355 Functional Team 356 Problem-Solving Team 356 Cross-Functional Team 356 Self-Managed Team 357 Virtual Team 358 Global Team 360 Across Cultures Competency: Alcoa’s Global Virtual Teams 361 Core Influences on Team Effectiveness 362 Context 362 Leadership 364 Ethics Competency: Sanjiv Das’s Leadership at CitiMortgage 364 Goals 365 Team Size 366 Member Roles 367 Member Diversity 369 Diversity Competency: Angela Braly, CEO and President, WellPoint, Inc. 370 Norms 371 Cohesiveness 372 Potential Team Dysfunctions 373 Groupthink 374 Free Riding 375 Bad Apples Effect 376 Absence of Trust 376 Avoidance of Accountability for Results 376 Chapter Summary 377 Key Terms and Concepts 378 Discussion Questions 378 Experiential Exercise and Case 379 Experiential Exercise: Teams Competency—Team Assessment Inventory 379 Case: Teams Competency—Absence of Teamwork 380 Chapter 13 Managing Conflict and Negotiating Effectively 382 Learning from Experience: Cathy McBroom versus Federal Judge Samuel Kent 383 Conflict Levels 385 Intrapersonal Conflict 386 Interpersonal Conflict 386 Contents Intragroup Conflict 387 Intergroup Conflict 388 Teams Competency: IBM’s Cross-Team Workouts 389 Interpersonal Conflict-Handling Styles 390 Collaborating Style 391 Compromising Style 392 Forcing Style 392 Accommodating Style 393 Avoiding Style 394 Insights for Leaders 394 Self Competency: Reflections on Conflict-Avoiding Managers 394 Negotiation in Conflict Management 395 Stages of Negotiation 395 Distributive Negotiations Strategy 396 Integrative Negotiations Strategy 397 Common Influences on Negotiation Strategies 398 Change Competency: GM and UAW Negotiate for Mutual Survival 400 Across Culture Negotiations 402 Differences in Negotiators 402 Cross-Cultural Emotional Intelligence 403 Insights for Leaders 404 Across Cultures Competency: Business Negotiations in Germany and Italy 405 Chapter Summary 406 Key Terms and Concepts 406 Discussion Questions 407 Experiential Exercise and Case 407 Experiential Exercise: Self Competency—Conflict-Handling Styles 407 Case: Communication Competency—Conflict Style Case Incidents 409 Part 4: The Organization 411 Chapter 14 Managerial Decision Making 412 Learning from Experience: David Hoover, CEO of Ball Corporation 413 Decision-Making Conditions 415 Certainty 415 Risk 416 Uncertainty 417 Change Competency: Shoes For Crews Reduces Risk and Uncertainty 418 Bounded Rationality 419 Satisficing 419 Limited Search 420 Inadequate Information and Control 421 Insights for Leaders 422 Knowledge Management 423 Change Competency: St. Clair Hospital Adopts RFID and Related Technologies 424 Evidence-Based Management 425 Diagnostic Questions 425 Role of Wisdom 426 Insights for Leaders 426 Diversity Competency: Chubb’s Business Case for Diversity 427 Political Decision Making 428 Divergence in Problem Definition 429 Divergence in Goals 429 Divergence in Solutions 430 Insights for Leaders 430 xv xvi Contents Creative Decision Making 431 Creative Stages 432 De Bono’s Lateral Thinking 433 Osborn’s Creativity Process 434 Teams Competency: IDEO Brainstorms 436 Electronic Brainstorming 437 Insights for Leaders 438 Chapter Summary 438 Key Terms and Concepts 439 Discussion Questions 439 Experiential Exercise and Case 440 Experiential Exercise: Self Competency—Personal Creativity Inventory 440 Case: Self Competency—A Manager's Dilemma: Who Gets the Project? 441 Chapter 15 Organization Design 444 Learning from Experience: Lowe’s Companies, Inc. 445 Key Factors in Organization Design 446 Environmental Factors 447 Strategic Factors 449 Change Competency: KFC in China 452 Fundamentals of Organizing 453 Differentiation 453 Integration 454 Vertical Organizational Design 456 Hierarchy 456 Span of Control 457 Authority, Responsibility, and Accountability 457 Ethics Competency: Enron 458 Delegation 459 Centralization and Decentralization 460 Across Cultures Competency: Eureka 462 Horizontal Organizational Design 463 Functional Design 463 Product Design 464 Geographical Design 466 Network Design 467 Communication Competency: DreamWorks Animation SKG 469 Chapter Summary 471 Key Terms and Concepts 471 Discussion Questions 472 Experiential Exercise and Case 472 Experiential Exercise: Communication Competency—Analyzing Your Organization's Design 472 Case: Change Competency—FedEx Office and Print Services, Inc. 474 Chapter 16 Cultivating Organizational Culture 476 Learning from Experience: Zappos 477 Dynamics of Organizational Culture 478 Forming a Culture 481 Across Cultures Competency: Ricardo Semler, CEO of Brazil’s Semco Manufacturing 483 Sustaining a Culture: Insights for Leaders 484 Changing a Culture 487 Change Competency: Harley-Davidson’s Culture 488 Contents xvii Types of Organizational Culture 489 Bureaucratic Culture 490 Clan Culture 491 Entrepreneurial Culture 492 Communications Competency: Texas Nameplate Company 492 Market Culture 493 Culture–Performance Relationships 493 Insights for Leaders 494 Ethical Behavior and Organizational Culture 494 Impact of Culture 494 Whistle-Blowing 495 Ethics Competency: What Would You Do? 496 Insights for Leaders 496 Fostering Cultural Diversity 497 Challenges 497 Insights for Leaders 498 Socialization of New Employees 499 Organizational Socialization Process 499 Insights for Leaders 502 Chapter Summary 503 Key Terms and Concepts 503 Discussion Questions 504 Experiential Exercise and Case 504 Experiential Exercise: Self Competency—Assessing the Culture of Your Organization 504 Case: Self Competency—Wegmans 506 Chapter 17 Managing Organizational Change 508 Learning from Experience: José Sergio Gabrielli de Azevedo of Petrobras 509 Pressures for Change 510 Why Change? 510 Globalization 511 Technology 512 Social Networks 513 Generational Differences 514 Diversity Competency: Managing across Generations 515 Planned Organizational Change 515 Economic Approach 516 Organizational Development Approach 516 Effective Change Programs 517 Insights for Leaders 518 Resistance to Change 519 Individual Resistance 519 Self Competency: Are You Ready to Change? 522 Reducing Resistance through Engagement 523 Reducing Organizational Resistance 523 Force Field Analysis 525 Change Competency: Target 527 Organizational Diagnosis 528 Information Needed 528 Capacity for Change 528 Change Methods 530 Interpersonal Methods 530 Team Methods 533 Organizational Methods 535 Communication Competency: United Technologies’ Diversity Programs 536 xviii Contents Chapter Summary 537 Key Terms and Concepts 538 Discussion Questions 538 Experiential Exercise and Case 538 Experiential Exercise: Self Competency—Assessing an Organization's Readiness for Change 538 Case: Communication Competency—Carolyn Bivens: Change Agent at the Ladies Professional Golf Association 539 Part 5: Integrating Cases 541 Case Case Case Case Case Case Case Case Case 1 2 3 4 5 6 7 8 9 Appendix: A Day in the Life of Yolanda Valdez 542 Alan Mulally, CEO, Ford Motor Company 543 Conflict Resolution at General Hospital 545 Bob Knowlton 547 BMW’s Dream Factory and Culture 550 ROWE Program at Best Buy 553 Whole Foods Market 555 The Road to Hell 559 How Personal Can Ethics Get? 562 BizFlix A-1 Chapter 1: In Good Company A-1 Chapter 2: The Emperor's Club A-1 Chapter 3: Because I Said So A-1 Chapter 4: The Breakfast Club A-1 Chapter 5: Take the Lead A-2 Chapter 6: Friday Night Lights (I) A-2 Chapter 7: Gracie A-2 Chapter 8: The Upside of Anger A-3 Chapter 9: Friday Night Lights (II) A-3 Chapter 10: Doomsday A-3 Chapter 11: Hot Fuzz A-4 Chapter 12: Friends with Money A-4 Chapter 13: Welcome Home Roscoe Jenkins A-4 Chapter 14: Failure to Launch A-5 Chapter 15: Rendition A-5 Chapter 16: Charlie Wilson's War A-5 Chapter 17: Field of Dreams A-6 References R-1 Subject and Organizational Index I-1 Author Index I-19 Preface As we started to write the 13th edition of this book, many of our friends asked us why we were revising it. Our answer was that we believe we have the desire and the ability to help students learn about important issues that they will face as leaders. After all, we have been writing, teaching, and consulting as a team for a combined total of more than 80 years. When we published the first edition of this book in 1976, a number of the topics, concepts, and models presented in this edition were not covered. Of course, leaders continue to face many of the same challenges they faced during the mid-1970s, such as attracting, retaining, and motivating employees; forming and leading highperformance teams; managing conflicts; and changing their organizations' processes to be more effective. However, the complexity of leading people has changed. With the development of the Internet, Twitter, Facebook, and a host of other communication vehicles, issues facing employees and leaders are instantly broadcast around the globe. At times, the decisions of leaders may impact millions of employees. Just recently, we have witnessed the failure of General Motors and Chrysler being sold to an Italian automobile company (Fiat); major changes in the U.S. banking system; the expanded “reach” of the U.S. government into the management of private firms; leaders of major institutions, such as Bernie Madoff and Allen Stanford, being convicted of ethical violations; the rise of developing nations, especially India and China, as major players in almost every industry; and the global recession. This edition presents how employees and leaders from around the globe have sought to respond to these pressing issues. Snapshot of What’s New As employees and leaders conduct business around the world, they face many ethical challenges. New to this edition is Chapter 2, “Individual and Organizational Ethics.” This chapter highlights ethical concepts and concerns that are relevant to all employees and leaders. Some of the major concerns that we believe need to be addressed by employees and leaders include workforce diversity, stakeholder responsibility, outsourcing, and ethical values. The ethical competency is so important that we present 9 NEW ethical competency features. They appear in various chapters throughout the book. These features enable the reader to consider a variety of ethical situations and how they were addressed. In addition, ethics-based exercises and cases at the end of each chapter require the reader to make decisions and choose a course of action. In addition to this NEW chapter, we have completely revised major portions of each chapter, especially the leadership, decision making, and organization design chapters. If the 13th edition is a major revision that reflects the challenges facing today’s and tomorrow’s leaders, what’s new? • First, all Learning from Experience features are new. A wide variety of organizations are represented in these chapter-opening features, including Xerox, PepsiCo, Costco, Lowe’s, and Petrobras. Each chapter-opening feature introduces you to the major themes developed in the chapter and illustrates some of the challenges facing employees and leaders. • Second, the Competency features, four per chapter, are virtually all new. These give you an opportunity to quickly read about an issue and then use the materials in the chapter to gain a new perspective on the issue. • Third, at the end of select chapters, we have included NEW Experiential Exercises. We have retained some exercises that you thought were effective and developed others that are new to this edition. xx Preface • • • • • • Fourth, 13 NEW and 4 revised cases appear at the end of the chapters. These cases serve to reinforce the major concepts developed within the chapter and are based on real incidents from a variety of organizations. Each case serves to reinforce the major concepts developed within the chapter and are based on actual organizations. Fifth, we have added 14 NEW and retained 3 BizFlix videos that we have found to enrich student learning. These short videos provide keen insights into real-life challenges facing employees and leaders. Sixth, we have updated and added new Integrating Cases for those instructors who wish to have complex cases that span a chapter’s content. A total of 9 integrated cases are included for those instructors who wish to use more comprehensive cases that span the content found in several chapters. Seventh, we have added new PowerPoints® to reflect our new content. All PowerPoints have been redesigned based on the recommendations of our users. Eighth, Susan Leshnower has completely updated the Instructor's Manual to accompany the text. This valuable resource will help new and practiced professors, providing text notes, enrichment modules, and more. Lastly, John Hite and Scott Tarcy have developed and tested almost 4,000 true/ false, multiple-choice, short answer, and essay questions for this edition. Snapshot of What Stayed the Same First, as in all previous editions, we have pursued the goal of presenting core concepts and foundation principles that are fundamental to individual and organizational effectiveness. These are highlighted through the use of contemporary examples, issues, and leadership practices. Second, to actively engage the readers in the learning process and assist them in developing their individual and management competencies, we have included more than 30 self-assessment instruments for them to complete. We have found that these instruments enrich the students’ learning experience and expose them to competencies that they need to develop to become effective employees and successful leaders. Third, our approach has also been to develop and integrate a few major concepts well rather than to expose students to a “laundry list” of concepts without any real-world takeaway. Therefore, we continue to use real-life examples from a variety of organizations to support student learning. Finally, the Instructor’s Manual has been a continuing source of strength for many faculty members. We have retained its author, and she has added new enrichment modules to help faculty members explain each chapter’s content to students. The Learning Process Our road map to the learning process starts in Chapter 1. In this chapter, we discuss differences between leaders and managers, introduce you to the learning framework for the entire book and illustrate the key attributes of the seven key competencies that are woven into the text. Based on research and our own experience, we present seven competencies that we believe all employees and leaders need to master. Key Competencies Ethics Competency This includes the knowledge, skills, and abilities to incorporate values and principles that distinguish right from wrong when making decisions and choosing behaviors. Preface xxi Self Competency This includes the knowledge, skills, and abilities to assess personal strengths and weaknesses, set and pursue professional and personal goals, balance work and personal life, and engage in new learning. Self Change Diversity Diversity Competency This includes the knowledge, skills, and abilities to value unique individual, group, and organizational characteristics, embrace such characteristics as potential sources of strength, and appreciate the uniqueness of each. Ethics Across Cultures Teams Across Cultures Competency Communication This includes the knowledge, skills, and abilities to recognize and embrace similarities and differences among nations and cultures. Communication Competency This includes the knowledge, skills, and abilities to use all modes of transmitting, understanding, and receiving ideas, thoughts, and feelings—verbal, listening, nonverbal, and written—for accurately transferring and exchanging information. Teams Competency This includes the knowledge, skills, and abilities to develop, support, and lead groups to achieve goals. Change Competency This includes the knowledge, skills, and abilities to recognize and implement needed adaptations or entirely new transformations in people, tasks, strategies, structures, or technologies. Pep siCo , go to w ww.p epsi co.c om . NEVI LLE ELDE R/CO RBIS Throughout the book, students are provided with rich opportunities to become actively involved in their own learning. These opportunities include self-assessment instruments, experiential exercises, case studies, BizFlix, and discussion questions. 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Le and ither react re sayi re mm inin goa ty of P ate t m u dow ass ng s aro sts in itg th epsi n, o ls a e re in nd the e r yo ume Co a und or th g beca to un d han to m best u ca ders lly get the ey d use ds o eliver o n sa beh tan eet glo the dw f ou ur p y, be. 1 ind m to on’t un they’re h r urp w eth de 185 hurt d pers ose er th hat ,000 , up pect o.” If yo rstand e set, y’re asso wh ive— the u con y re cibeca react fr at it is fuse acte tive I’ve om use d, d— s fi ask a ne you ed posi ghting then it gati did ve tive n’t just each like inte beco oth oth the er p nt, m e r. w e I erso B s thin ay n sa k oft ut whe two n ega ys, n yo “He en wh ua at h y, w app ssume ait To le am e arn inute ns is th mo e ,m re ab a ybe out Learning from Experience Feature This feature introduces the reader to the major themes developed within each chapter. To do so, we often use leaders and organizations that most students are familiar with, such as Indra Nooyi of PepsiCo, Jim Sinegal of Costco, Steve Jobs of Apple, and Anne xxii Preface Mulcahy of Xerox. Fifteen of these features are NEW to this edition. We wrote these features to illustrate effective or ineffective use of one or more of our seven competencies. Within the chapter, there are flashbacks to how the Learning from Experience feature illustrates particular concepts or practices. Insight Feature Ethics Insight Senior leaders typically emphasize the importance of performance and the bottom line. But if they don’t also emphasize ethical behavioral messages, then all employees hear is that it’s all about the numbers. Get the numbers at all costs, they think—and that causes some to compromise ethics. Ronald James, President and CEO, Center for Ethical Business Cultures Each chapter has two Insight features that are related to one of our seven competencies. This feature emphasizes a leader’s thinking about an issue. These are brief and are intended to highlight a particular theme in the text. Some of the Diversity Insights are from Ronald Parker of PepsiCo, Magda Yrizarry of Verizon Communications, and David George of United Technologies. Other leaders included in different Insight features include Jim Sinegal of Costco, Martin Coles of Starbucks, Stacy Guinn of Sherwin-Williams, Patricia Woertz of Archer Daniels Midland, and Olli-Pekka Kallasvuo of Nokia. Competency Features Following a tradition we started several editions ago, there are 4 competency features in each chapter. These features aid student learning by reinforcing each chapter’s content and challenge the student to consider it in relation to a model, concept, or practice presented in that section of the chapter. These reflect real-world challenges or issues that have faced employees and leaders. We have 68 competency features that help students develop their own competencies. Eighty percent are NEW to this edition. Those that have been retained have been updated and revised. Let’s briefly highlight some of the organizations and/or leaders that are included in this feature. Self competency Indra Nooyi’s Development Journey Nooyi learned early on to embrace diversity rather than hide her differences in the corporate world. Long fascinated by the opportunities and culture of America, after working for a time in India, she headed to the United States. Coming out of Yale in 1980 with a master’s in public and Across Cultures competency Carlos Ghosn, CEO, Nissan-Renault J. Frank Brown, dean of INSEAD, a leading business school in France, comments: “Increased globalization is changing the landscape of the business climate and creating a demand for business leaders who can operate in and across different cultures. Carlos Ghosn personifies the essence of a transcultural leader Communication competency by recognizing that cultural diversity is an Maureen Chiquet, Global CEO, Chanel S.A. In retail, you’ve got to have a strong point of view and present it effectively. But to lead effectively and achieve real business results as the head of any enterprise, you have to listen. You’ve tt t tl k ti d k t Teams competency Whenever I’m in a Chanel boutique, I ask the store employees what’s selling, how consumers are responding, and what we should be doing differently. Their observations help me fi th ht b t th b i Grant Reid, President, Mars Drinks My thought process around leadership used to be that I would make decisions, everyone would come in, I would give them the charter for the day, and they would all run off. Now, I i th t it’ t b t it’ b t move forward without you there. When you have teams capable of making decisions, there are a lot of things you can let go. When I took over Mars Drinks, we were meeting globally, as a mantt th P l fl i Change competency Indra Nooyi Leads Change at PepsiCo Since becoming CEO, Nooyi has reorganized PepsiCo to make it less focused on just the United States and broadened the top leadership team. She has hired an Italian native, Massimo d’A t l d th di i i th t i l d Name me one other company that took out trans fats from all its products without increasing the price of its products—four or five years before anyone else. We’re doing everything possible to hift tf li t ‘b tt f ’ ‘ df Preface Ethics Competency Of the 10 features, 9 are NEW to this edition and include organizations such as Johnson & Johnson, Mattel, The Gap, CitiMortgage, and Enron. Self Competency Of the 11 features, 7 are NEW to this edition and include leaders such as John Schnatter of Papa John’s Pizza, Indra Nooyi of PepsiCo, Colin Powell, and Chesley Sullenberger (Sully) of US Airways. Diversity Competency Of the 8 features, 6 are NEW to this edition and include insights from Aetna, Deloitte & Touche, Lockheed Martin, WellPoint, and Chubb. Across Cultures Competency Of the 11 features, 9 are NEW to this edition and include examples of leaders and organizations such as Carlos Ghosn of Nissan-Renault, Tahir Ayub of PricewaterhouseCoopers, Hewlett-Packard, Alcoa, and Ricardo Semler of Brazil-based Semco. Communication Competency All 9 features are NEW to this edition. Included are leaders from Chanel, Intuit, Chroma Technology, DreamWorks, United Technologies, and Texas Nameplate. Teams Competency Of these 8 competency features, 4 are NEW to this edition. Teams from Mars, Starbucks, SEI Investments, Jeff Gordon’s Rainbow Warriors, Gore & Associates, and IBM are highlighted. Change Competency Eleven of the 13 competency features are NEW to this edition. Leaders and teams discussed range from PepsiCo to Boeing to Yahoo and Harley-Davidson. Key Terms and Concepts Key terms and concepts appear in blue and definitions immediately follow in italics. A list of all terms introduced in the chapter is given at the end of each chapter, along with the page on which it is defined. Discussion Questions 26 6. D Par t1 escr cultur ibe the ac and es compe ross it effect s contri tency ive pe bution rfor man to ce. Intr oduc tion and Eth ical Foun d The atio ns ogn across iz cult app e and u ro em res Ind ach ke brace compet iv 7. D escrib influ iduals’ y organ similar ency in it e clud en an iz ies com the at d gr of sw ced m oup ional an and dif es the eep by th com unicatio s’ kn fe ing ei pe n neg r cult percep d strate rences owled its co tency an u ativ ge The nt e ster re. To tions, gic issu among , skil effect ributi d o oft ls com mit, commu eo ive pe on to types mu es wit nation , and en rfor verb receive, nicatio abo , one’s nicatio h an o s and cu abilitie man n ut th s cu n ce. p exch al, writt and un compet ose lture , decis en and ltures an to recan d en en m er ion fr gi , ay descr om d th curi ng listen stand cy in other influ s, and 8. D o en en bal ibing, inform ing, el data, cludes escrib beh us m cult ce th ac at co in e th ures. the d aviors ind. com circ mmu tive li ion an ectron format e know e te pe evel n st u ic its co tency an ams opm are enh latory ication ening, d emo , and ion, th ledge, ntri d ent ti sk o an , sy th q u o an u il bu st effect ce in e gh n es ls ive pe tion to divid em, no d writt tionin s. Core like— ts, and , and ab en fo g, u rfor ual, il ri em The co r man 9. D team shing comm nonverb mpon accura otion ities to ce. escr u port teams an en s— tr te , an co , d org d carr nication al comm ts of ly tran nonve anscom ibe the indiv and le mpet pe ch th .T sf u aniz ying rb its co tency an ange idual ad te ency atio info his co nicatio is com erring al, nt nal n and ams to includ effect ributi d effe rmatio mpeten , empat petency and team es The ac n to ive pe on to ctiv cy is hizin are diffe hieve the kn chan en rfor o li es im g, ther ke rence organ owle s. ge man ple com the b verdge ce. izat s is one ment compet , o p io sk d stre eten n ssed nal go ills, an Key cies y’s prim of the p eeded ency in als. . ad cl to ri ary Term Rec d abilit enab mary so aptatio udes th ogn ns s an e ler o ition ies to d u Acr f incr rces of or enti knowle dC of th evelo o dge re ch easi onc p, e po Activ ss cultu ng o ange, ly new , skills tenti supepts tran whic , an rgan al Car e listen res com d sf for h izat ee ional create ormatio abilitie Car r, 13 ing, 20 petency s s n ee to re effe , 17 Car r devel ctiv a state s. New cogn enes ee o te Chan r plan opmen s an f blur. T chnolo ize an d , t, 14 d ef Com ge com 14 ficien he Inte gies ar e rnet cy. Com munic petency is a at Eth ics, Cult petency ion co , 23 1 Eth mpet ics co 0 Cult ural valu , 8 ency G u m es , 19 lob p , 17 Des re, 17 Lea al min etency, cr d-set d Div ibing 1 Lea er, 4 er sk , 18 0 d Em sity co ill, 19 p Man ership, Eth athizin mpeten Non ager, 5 4 ical g cy dilem skill, 2 , 14 Org verbal 0 ma, co an 10 Ques izatio mmun n Self tionin al beh ication Dis g , av cus Tea compet skill, 2 ior, 4 20 sion m 0 ency Ver s com , 12 Que 1. b p stio In th Wri al com etency, m tten 2 ns stat e Learn com unicatio 1 es: “P in mun n lars erfo g from : icat , 20 ion, and human rmance Exper tale ienc sust 20 nt at aina with e feat ww Pur su bi ur “Pep w.pep stainabi lity, en pose re e, In si the siCo V co.com lity.” G vironm sts on dra Noo al o et th enta . men hics co ues an Click to the l su ree pil- yi d on st 2. t of P m “Gui petenc Philoso “Com epsiCo ainabilit Rev ie pany phy. y ar ding w y, A. E w the Princ e illus ” Whi ” and ebsite E cker trat ch iple attr t, C thics C attr choose ed in s”? ib ha Pep ibutes feat utes of irman ompete siCo’ 3. of ur nc the Rev e? s stat ethi and CE y featur iew cs co eO Div the mpe , Matte e entitl er D ed tenc l, of th se Dis iversity y ar Inc.” W “Rober co e ill t feat e divers veries Compe ustr hich ure? ity co Pro te ated mpe gram ncy feat in th .” W tenc ure is hi y ar on “A e ill ch attr et ustr na’s ated ibutes in th is More than 160 questions are NEW to this edition. In these end-of-chapter questions, the first question requires the student to use the Internet to search for an answer. This question is based on the Learning from Experience feature that opens each chapter. The ethical and diversity discussion questions also require the student to use the xxiii xxiv Preface Internet. All questions engage students to use their diagnostic skills and various key competencies. Experiential Exercises and Cases Each chapter has at least one experiential exercise and one case that are keyed to one of the seven competencies. These end-of-chapter features provide additional means for learners to actively participate in the development of their own competencies. All of these have been class tested and have proven to stimulate active classroom discussion. Some of the Experiential Exercises include a foundation competency inventory, ethical decision making, a creativity inventory, a communication climate inventory, coping with work-related stress, team assessment, conflict handling styles, and cultural values. A few of the organizations included in cases are Accenture, Oracle, SAS Institute, Wegmans, Virgin Airlines, Allstate, and the Ladies Professional Golf Association. At the end of each case, we pose several questions that have been found to stimulate learners’ competencies. Chapter Summary Every chapter ends with a summary of the chapter’s main points. These summaries are organized around the chapter’s Learning Goals. Readers can use these summaries to assess their mastery of the material presented in the chapter. Assessment Instruments Throughout the book, we present more than 30 self, team, and organizational assessment instruments. Typically, they focus on one or more of the key competencies in the chapter. Usually these are found within the chapter and learners are invited to complete them as they read the text to enhance their understanding of the concept being presented. They are designed to help the individual (1) gain self-insights, (2) gain knowledge about teams that they have worked with, (3) gain understanding about organizations that they have worked with or used, (4) more readily understand the concepts in the text, (5) identify their own strengths and weaknesses, and (6) gain insights about how to be a more effective employee and future leader. Some examples are: • Chapter 1: Competencies Inventory • Chapter 2: Ethical Intensity • Chapter 3: Big Five Personality Inventory • Chapter 4: Impression Management Assessment • Chapter 5: What Is Your Self-Efficacy? • Chapter 6: Designing a Challenging Job • Chapter 7: Goal Commitment Questionnaire • Chapter 8: Workplace Bullying Preface • • • • • • • • • xxv Chapter 9: Polychronic Attitude Index (How Do You Use Time?) Chapter 10: Behavioral Leadership Questionnaire Chapter 11: Globe Leadership Instrument Chapter 12: Team Assessment Inventory Chapter 13: Conflict Handling Styles Chapter 14: Personal Creativity Inventory Chapter 15: Analyzing Your Organization’s Design Chapter 16: What Do You Value at Work? Chapter 17: Diversity Perceptions Scale 5 part Inte Cas grating es Integrating Cases We have included 9 integrating cases in Part 5. Each cases poses questions that require learners to draw from a variety of concepts and models presented in various chapters. The goal of these cases and questions is to foster the critical and analytical thinking capabilities of readers. The questions require the learner to have mastered the materials. We have posed questions linked to the seven competencies that have been illustrated throughout the book. AD ay in Alan Con ’s Dr eam How Roa d to Pers ona n Fact ory ma ood t Be s Ma of Y olan Ford n at wlto le F The lutio E Pr ogra Who EO, Reso Kno BMW ROW Life lly, C flict Bob the Mula uy rket z or C Gen and st B da V alde Mot eral omp any Hos 542 pita 543 l 545 Cut ure 547 550 Hell l Ca n Et 553 hics Get ? 555 559 562 Learning Framework The framework for learning about organizational behavior and how learners can develop their competencies is presented in Chapter 1, pages 5–8. As shown in Figure 1.1 on page 7, our framework starts with a focus on the individual, then moves to leadership and the team level, and concludes with a focus on the organization. We believe that it is impossible to understand why employees and leaders make certain decisions without first understanding something about their ethics, personality, motivations, leaderPart 2: The Individual in Organizations ship abilities, and the like. (Chapters 3–8) Part 1 of the book presents an introduction to the seven competencies and a NEW chapter that focuses on individual and organizational ethics. Given the Part 3: Leadership Part 4: The ethical challenges facing employand Team Behaviors Organization ees and leaders, we believed that (Chapters 9–13) (Chapters 14–17) a chapter dedicated to ethical Part 1: Introduction and Ethical Foundations issues early on in the book was (Chapters 1 and 2) needed. This chapter focuses learners’ attention on ethical issues of individual differences, decision making, diversity, and stakeholder responsibility. Part 2 of the book (Chapters 3 through 8) focuses on key aspects of the individPart 5: Integrating Cases; Appendix: BizFlix ual by discussing personality, xxvi Preface attributions, emotions, learning, motivation, goal setting, reward systems, workplace aggression, cultural values, and much more. These six chapters are full of examples of how leaders and individuals in global organizations use these concepts to lead and manage others. Part 3 of the book (Chapters 9 through 13) moves the learner from a focus on the individual to the interpersonal processes that influence individual, team, and organizational effectiveness. We start this five-chapter sequence with a focus on interpersonal communications and how individuals, leaders, and organizations can effectively create communication channels to increase effectiveness. Communications do not occur in a vacuum but through people. Therefore, in the next two chapters, we explore how leaders’ behaviors can impact the commitment, performance, and overall effectiveness of both individuals and teams. Developing and leading teams, the focus of Chapter 12, is a major part of a leader’s job. Teams must be led in order for them to be successful. At times, leaders and team members may be in conflict with each other over goals to pursue and negotiating strategies to use to reach an agreement. Chapter 13 addresses these issues. Part 4 of the book (Chapters 14 through 17) considers the factors that influence individual, team, leader, and organizational effectiveness. The part opens with a focus on factors and processes that influence how individuals and leaders make decisions. Decision making in many organizations is not orderly because the outcomes are usually not clear. For leaders to make decisions that will allow the organization to maintain or increase its effectiveness, however, the organization must be designed properly in order to pursue its goals. Chapter 15 addresses how the business strategy of an organization affects its choice of organizational design. This chapter reviews the core vertical and horizontal dimensions of an organization’s structure. Chapter 16 addresses the importance of creating an organizational culture that supports decision-making processes and the leader’s influence style. Corporate culture is the “soul” of an organization and, therefore, knowing how to create, sustain, and change a culture becomes a vital part of any leader’s goals. Finally in Chapter 17, we conclude with a discussion of how to manage organizational change. This discussion draws on concepts presented throughout the book in an integrated fashion. Resources for Instructors A full range of teaching and learning supplements and resources are available for use with the 13th edition of Organizational Behavior. Instructor’s Manual Written by Professor Susan Leshnower of Midland College, the Instructor’s Manual contains comprehensive resource materials for lectures, including enrichment modules for enhancing and extending relevant chapter concepts. It includes a variety of enrichment modules to explore many facets of organizational behavior. This supplement also presents suggested answers to all end-of-chapter discussion questions. It includes notes on using the end-of-chapter Experiential Exercise and Case features, including suggested answers to case questions and notes for the integrating cases. Finally, the Instructor’s Manual contains a guide to the videos available for use with the text. This manual is available on the Instructor’s Resource CD-ROM and on the product support website, www.cengage.com/management/hellriegel. Test Bank Written by John Hite and Scott Tarcy, the Test Bank contains almost 4,000 questions from which to choose. Each question is tagged to AACSB learning standards to Preface allow for the assessment of student achievement as it relates to these key measures. A selection of new and revised true/false, multiple-choice, short answer, and critical thinking essay questions is provided for each chapter. For this edition, the selection of short answer questions has been expanded. Each question in the Test Bank is classified according to type, difficulty level, and learning goal. Cross-references to materials in the textbook and pages where answers can be found are included. Explanations are provided for why statements are false in the true/false sections of the test bank. The Test Bank is available on the Instructor’s Resource CD-ROM and on the product support website, www.cengage.com/management/hellriegel. ExamView® Available on the Instructor’s Resource CD-ROM, ExamView contains all of the questions in the printed Test Bank. This program is easy-to-use test creation software that is compatible with Microsoft® Windows®. Instructors can add or edit questions, instructions, and answers, and select questions (randomly or numerically) by previewing them on the screen. Instructors can also create and administer quizzes online, whether over the Internet, a local-area network (LAN), or a wide-area network (WAN). PowerPoint® Presentation Slides Developed by Argie Butler of Texas A&M University and prepared in conjunction with the Instructor’s Manual, more than 500 PowerPoint slides are available to supplement course content, adding structure and a visual dimension to the learning experience. With a new, improved design, these PowerPoint slides present the dynamic nature of the materials while also allowing for easy customization. Available on the website (www. cengage.com/management/hellriegel) and the Instructor’s Resource CD-ROM, all of the PowerPoint slides include meaningful captions that tie in directly to the concepts in the book. Material is organized by chapter and can be modified or expanded for individual classroom use. PowerPoint slides are easily printed to create customized transparency masters. We want learners to engage with their classroom experience and grow from it. Instructor’s Resource CD-ROM (ISBN: 0-538-74201-1) Key instructor ancillaries (Instructor’s Manual, Test Bank, ExamView, and PowerPoint slides) are provided on the Instructor’s Resource CD-ROM. This CD-ROM provides instructors with the ultimate tool for customizing lectures and presentations. Reel to Real Video Package DVD (ISBN: 1-439-07888-2) A video library is available to users of the 13th edition to show how real organizations and managers deal with organizational behavior issues. This unique video package is available on DVD for classroom use. xxvii xxviii Preface BizFlix videos use short film scenes from popular Hollywood films, including In Good Company, Friday Night Lights, and Hot Fuzz, to illustrate organizational behavior concepts from the text. These film scenes help learners synthesize and reflect on key concepts. Each film clip is associated with a specific text chapter, but many could be utilized to accompany several chapters. The 17 BizFlix videos—14 NEW and 3 retained—are presented in brief form, along with key questions, in the Appendix at the end of the text. Workplace videos are from organizations including Evo and Numi Organic Tea. They give learners a look inside the situations faced by organizations and the subsequent solution. Cengage Learning Custom Solutions and TextChoice.com Create your perfect text, casebook, or reader with TextChoice from Cengage Learning Custom Solutions. TextChoice provides the fastest, easiest way for instructors to create their own learning materials. A list of suggested cases from Harvard Business School Publishing can be found on the companion website (www.cengage.com/management/ hellriegel), but more than 13,000 cases are available on TextChoices.com through our Case Net database. Case Net is a collection of business cases from prestigious partners such as Harvard Business School Publishing, Ivey, and Darden Business Publishing. Contact your local South-Western/Cengage Learning sales representative for more information on these additional case resources, or for more information about providing your students a customized edition of this text. Learner and Instructor Resources Student Premium Website (www.cengage.com/login) New to this edition, this optional premium website features text-specific resources that enhance student learning by bringing concepts to life. Dynamic interactive learning tools include online quizzes, flash cards, PowerPoint slides, concept tutorials, learning games, competency assessments, and more. Access to the Hellriegel/Slocum Premium Student Website is pincode protected. Learn more by adding this text to your bookshelf at www.cengage.com/login. Ask your local South-Western/Cengage Learning sales representative about this optional package item. Enriching Competency Instrument Through the text’s new student premium website, learners can access a detailed selfassessment competency instrument to use and reuse as their competencies develop. Individual ratings can be compared with those of practicing professionals and others. These comparisons give learners feedback on their developmental needs. In addition, Preface videos, glossaries, and links to other online resources complete this collection of technology-based tools and content. The Premium Student Website is free when bundled with a new textbook. WebTutorTM (0-538-49561-8 on WebCT® or 0-538-49553-7 on BlackBoard®) WebTutor is an interactive, web-based learner supplement on WebCT and/or BlackBoard that harnesses the power of the Internet to deliver innovative learning aids that actively engage learners. Instructors can incorporate WebTutor as an integral part of their course, or the learners can use it on their own as a study guide. Benefits to learners include automatic feedback from quizzes and exams; interactive, multimedia-rich explanation of concepts; online exercises that reinforce what they have learned; flash cards that include audio support; and greater interaction and involvement through online discussion forums. Complementary Website The website at www.cengage.com/management/hellriegel complements and enriches the text, providing extras for learners and instructors. Resources include interactive chapter quizzes and flash cards. The Business & Company Resource Center The Business & Company Resource Center (BCRC) puts a business library at the learner’s fingertips. The BCRC is a premier online business research tool that allows learners to seamlessly search thousands of periodicals, journals, references, financial information, industry reports, company histories, and much more. This all-in-one reference tool is invaluable to learners, helping them to quickly research their case analysis, presentation, or business plan. Learners can save time and money by building an online coursepack using BCRC InfoMarks. It links learners directly to the assigned reading without the inconvenience of library reserves, permissions, or printed materials. Contact your local South-Western/Cengage Learning sales representative to learn more about this powerful tool and how the BCRC can save valuable time for both instructors and learners. Acknowledgments We express our sincere and grateful appreciation to the following individuals who provided thoughtful reviews and useful suggestions for improving this edition of Organizational Behavior. Their insights were critical in making a number of important revisions. xxix xxx Preface Maryann Albrecht, University of Illinois at Chicago Barry Bales, University of Texas Cecily Cooper, University of Miami Edward Cox, EDS, a HP Company Thomas Fairchild, University of North Texas Health Science Center Sue Hammond, Thin Book Publishing MaryRose L. Hart, Rogers State University Howard Johnson, Lowe’s Corporation William Joyce, Dartmouth College Any Kohlberg, Kisco Senior Living Maribeth Kuenzi, Southern Methodist University David Lei, Southern Methodist University Fred Luthans, University of Nebraska Antoinette Phillips, Southeastern Louisiana University Consuelo M. Ramirez, University of Texas, San Antonio William Reisel, St. John’s University Ralph Sorrentino, Deloitte Consulting David Stoner, ViewCast Charlotte Sutton, Auburn University Paul D. Sweeney, University of Dayton Bill Wallick, University of Scranton Ben Welch, Texas A&M University For their assistance with the previous edition, we would like to thank the following individuals: Eileen Albright, Cinemark Theaters Lucinda Blue, Strayer University Alicia Boisnier, State University of New York at Buffalo Rupert Campbell, St. Joseph’s College Robin Cheramie, Kennesaw State University David Ford, University of Texas at Dallas Lynda Fuller, Wilmington College Amy Henley, Kennesaw State University Peter Heslin, Southern Methodist University Homer Johnson, Loyola University, Chicago Morgan R. Milner, Eastern Michigan University Padmakuma Nair, University of Texas at Dallas Rhonda Palladi, Georgia State University Alesia Stanley, Wayland Baptist University Barbara Thomas, Hewlett-Packard Roger Volkema, American University William Walker, University of Houston For their valuable professional guidance and collegial support, we sincerely thank the following individuals who served on the team responsible for this edition: Michele Rhoades, the senior acquisition editor, who supported us in framing the • revisions for this edition • Scott Person, the executive editor, who also offered support in this revision • Erin Guendelsberger, the developmental editor, who demonstrated many competencies on all facets of this edition and also provided a key interface with the authors of the various supplements • Lorretta Palagi, the copyeditor, who was outstanding in improving the flow and readability of the manuscript Emily Nesheim, the content project manager, who so deftly handled the myriad • issues in the production process • Clint Kernen, the marketing manager, who provided the fine leadership in presenting this edition to potential adopters • Tina Potter, John Slocum’s associate at Southern Methodist University, who superbly supported manuscript preparation • Argie Butler, Don Hellriegel’s long-time associate at Texas A&M University, who creatively designed and developed the PowerPoint slides for this edition and superbly supported manuscript preparation Preface • • Amanda Zagnoli, the project editor at Elm Street Publishing Services, who ensured that excellent page proofs were developed and provided on schedule Patsy Hartmangruber, Don Hellriegel’s associate at Texas A&M University, who ably assisted him with various tasks. Don Hellriegel expresses his appreciation to colleagues at Texas A&M University who collectively create a work environment that nurtures his continued learning and professional development. In particular, the learning environment fostered by Jerry Strawser, Dean, and Murray Barrick, head of the Management Department, is gratefully acknowledged. They continue the tradition of supporting a positive and learning-based work environment. John Slocum acknowledges his colleagues at Southern Methodist University, especially Tom (aka “The Lion”) Perkowski, for their constructive input and reviews. Also, special thanks are extended to Bill Dillon, Associate Dean of the Cox School, for his intellectual support and warm friendship. To all of the executive MBA students who listened to countless stories and wrote cases for this book, John is forever grateful. John also thanks his golfing group at Stonebriar Country Club (Jack Kennedy, Cecil Ewell, Ed Cox, Wally Schortmann, and Mark Gilbert) for understanding that books do not get written on the fairways or on putting greens. Finally, we celebrate the 13th edition, some 35 years after the publication of our first edition in 1976. We wish to thank many hundred of reviewers, adopters, students, and our families who have supported the development of these 13 editions for more than three decades. Moreover, Don and John thank each other for being close friends since 1962. We met each other in an industrial relations class during our MBA days at Kent State University in 1962 and are still close and special friends. It’s been a unique and enriching experience for both of us and well as our wives. Don and Lois have raised three girls and now have 13 grandchildren. John and Gail raised three boys and now have seven grandchildren. Most importantly, we are happily married to our wives for more than 45 years. Don Hellriegel, Texas A&M University John W. Slocum, Jr., Southern Methodist University xxxi Author Page Don Hellriegel Don Hellriegel is Emeritus Professor of management within the Mays Business School at Texas A&M University. He received his B.S. and M.B.A. from Kent State University and his Ph.D. from the University of Washington. Dr. Hellriegel became a member of the faculty at Texas A&M in 1975. He has served on the faculties of the Pennsylvania State University and the University of Colorado. His research interests include organizational behavior, the effects of organizational environments, managerial cognitive styles, and organizational innovation and strategic management processes. His research has been published in a number of leading journals. Professor Hellriegel served as Vice President and Program Chair of the Academy of Management (1986), President Elect (1987), President (1988), and Past President (1989). In September 1999, he was elected to a three-year term as Dean of the Fellows Group of the Academy of Management. He served a term as Editor of the Academy of Management Review and served as a member of the Board of Governors of the Academy of Management (1979–1981 and 1982–1989). Dr. Hellriegel has performed many other leadership roles, among which include President, Eastern Academy of Management; Division Chair, Organization and Management Theory Division; President, Brazos County United Way; Co-Consulting Editor, West Series in Management, Head (1976–1980 and 1989–1994), Department of Management (TAMU); Interim Dean, Executive Associate Dean (1995–2000), Mays School of Business (TAMU); and Interim Executive Vice Chancellor (TAMUS). He has consulted with a variety of groups and organizations, including 3DI, Sun Ship Building, Penn Mutual Life Insurance, Texas A&M University System, Ministry of Industry and Commerce (Nation of Kuwait), Ministry of Agriculture (Nation of Dominican Republic), AACSB, and Texas Innovation Group. John W. Slocum, Jr. John W. Slocum, Jr., is an Emeritus Professor in the Cox School of Business at Southern Methodist University, Dallas, Texas. He has taught on the faculties of the University of Washington, Penn State, Ohio State, International University of Japan, and the Amos Tuck School, Dartmouth College. He holds a B.B.A. from Westminster College, a M.B.A. from Kent State, and a Ph.D. in organizational behavior from the University of Washington. Professor Slocum is Past President of the Eastern Academy of Management, the 39th President of the Academy of Management (1983–1984), and Editor of the Academy of Management Journal (1979–1981). He is a Fellow of the Academy of Management, Decision Science Institute, and the Pan-Pacific Institute. He has been awarded the Alumni Citation for Professional Accomplishment by Westminster College, and the Nicolas Salgo, Rotunda, and Executive MBA Outstanding Teaching Awards at SMU. Currently, he is serving as Co-Editor of the Journal of World Business and the Journal of Leadership and Organizational Studies and Associate Editor of Organizational Dynamics. Professor Slocum has served as a consultant to such organizations as ARAMARK, Baylor Hospital, University of North Texas Health Science Center, LBJ School at Author Page the University of Texas, Celanese Chemical Corporation, Pier 1, NASA, and Brakke Consulting. He is a regular speaker for many senior executive development programs, including the University of Oklahoma, Oklahoma State University, SMU, and Lockheed Martin. He is currently on the Board of Directors of ViewCast Corporation, Kisco Senior Living, and GoToLearn. xxxiii part 1 Introduction and Ethical Foundations chapter Learning about Organizational Behavior 1 Individual and Organizational Ethics 2 1 chapter 1 Learning about Organizational Behavior Learning Goals After studying this chapter, you should be able to: 1 State the core differences between leadership and management. 2 Outline the framework for learning about organizational behavior. 3 Describe the ethics competency and its contribution to effective performance. 4 Describe the self competency and its contribution to effective performance. 5 Describe the diversity competency and its contribution to effective performance. 6 Describe the across cultures competency and its contribution to effective performance. 7 Describe the communication competency and its contribution to effective performance. 8 Describe the teams competency and its contribution to effective performance. 9 Describe the change competency and its contribution to effective performance. Learning Content Learning from Experience Indra Nooyi, Chairman and CEO, PepsiCo Leadership versus Management Learning Framework Ethics Competency Ethics Competency Robert A. Eckert, Chairman and CEO, Mattel, Inc. Self Competency Self Competency Indra Nooyi’s Development Journey Diversity Competency Diversity Competency Aetna’s Diverse Discoveries Program Across Cultures Competency Across Cultures Competency Carlos Ghosn, CEO, Nissan-Renault Communication Competency Communication Competency Maureen Chiquet, Global CEO, Chanel S.A. Teams Competency Teams Competency Grant Reid, President, Mars Drinks Change Competency Change Competency Indra Nooyi Leads Change at PepsiCo Experiential Exercise And Case Experiential Exercise: Self Competency Key Competencies Self-Assessment Inventory Case: Diversity Competency Accenture’s Work–Life Balance Programs Learning from Experience Indra Nooyi, Chairman and CEO, PepsiCo To learn more about PepsiCo, go to www.pepsico.com. I’m wrong in reacting the way I do because this person is really making an effort.” Since becoming chairman and CEO, I’ve seen that one of the ways to inspire people is by having a vision that everyone can get behind. At PepsiCo, that vision is “Performance with Purpose.” It’s our company’s long-term strategy for delivering strong financial results while responding to the changing demands of our consumers and the marketplace. Performance with Purpose rests on three pillars: human sustainability, environmental sustainability, and talent sustainability. For example, we’re transforming our product portfolio in order to offer consumers healthier choices—everything from nourishing beverages and snacks that are good for you, to healthier, fun-for-you treats. This is human sustainability. We’re also driving initiatives to sustain the environment where we and our consumers live and work. And we’re committed to attracting, training, and retaining the best talent because the ability of PepsiCo to meet our performance goals and deliver our purpose agenda rests in the hands of our 185,000 associates around the globe.1 NEVILLE ELDER/CORBIS © PERSONS NAME/STOCK COMPANY Indra Nooyi became the CEO of PepsiCo in 2006 and was elected to the additional role of chairman of the board in 2007. PepsiCo has 185,000 employees. It manufactures, markets, and sells hundreds of different snacks and beverages worldwide. This opening feature provides a few insights about Indra Nooyi in her own words. My father was an absolutely wonderful human being. From him I learned to always assume positive intent. Whatever anybody says or does, assume positive intent. You will be amazed at how your whole approach to a person or problem becomes very different. When you assume negative intent, you’re angry. If you take away that anger and assume positive intent, you will be amazed. Your emotional quotient goes up because you are no longer almost random in your response. You don’t get defensive. You don’t scream. You are trying to understand and listen because at your basic core you are saying, “Maybe they are saying something to me that I’m not hearing.” So “assume positive intent” has been a huge piece of advice for me. In business, sometimes in the heat of the moment, people say things. You can either misconstrue what they’re saying and assume they are trying to put you down, or you can say, “Wait a minute. Let me really get behind what they are saying to understand whether they’re reacting because they’re hurt, upset, confused, or they don’t understand what it is I’ve asked them to do.” If you react from a negative perspective—because you didn’t like the way they reacted—then it just becomes two negatives fighting each other. But when you assume positive intent, I think often what happens is the other person says, “Hey, wait a minute, maybe 4 Part 1 Introduction and Ethical Foundations Indra Nooyi is a highly competent person and leader, as suggested in her remarks and confirmed through many forms of recognition by others. This opening feature suggests just a few of the elements in her rich portfolio of personal competencies. We will have more to say about these and the other competencies demonstrated by Nooyi as the chapter unfolds. The Organizational Behavior Division of the Academy of Management, the leading professional association dedicated to creating and disseminating knowledge about management and organizations, identifies the major topics of organizational behavior as follows: individual characteristics such as beliefs, values and personality; individual processes such as perception, motivation, decision making, judgment, commitment and control; group characteristics such as size, composition and structural properties; group processes such as decision making and leadership; organizational processes and practices such as goal setting, appraisal, feedback, rewards, behavioral aspects of task design; and the influence of all of these on such individual, group, and organizational outcomes as performance, turnover, absenteeism, and stress.2 We address all of these topics and more in this book. One theme of this book is to demonstrate the importance of organizational behavior to your own performance. You are or probably will be an employee of an organization—and in all likelihood of several organizations—during your career. You may eventually become a team leader, a manager, or an executive. Studying organizational behavior will help you attain the knowledge and competencies needed to perform effectively in all of these roles. The knowledge and competencies that you acquire will help you diagnose, understand, explain, and act on what is happening around you in your job. In the first section of this chapter, we introduce the elements of leadership versus management. Our general learning framework for achieving effective performance by individuals, teams, and organizations is presented next. In the remaining sections of this chapter, we explain each of the seven key competencies that are woven into the chapters throughout the book. Organizational behavior is the study of individuals and groups within an organizational context, and the study of internal processes and practices as they influence the effectiveness of individuals, teams, and organizations. It does this by taking a system approach. That is, organizational behavior strives to understand and improve people–organization relationships in terms of the individual, team, organization, and broader social system. Learning Goal 1. State the core differences between leadership and management. Leadership versus Management Leadership is the process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behaviors, and making hard decisions about human and other resources. Noel Tichy, who has studied many outstanding leaders, describes contemporary leadership in these words: Leadership is accomplishing something through other people that wouldn’t have happened if you weren’t there. And in today’s world, that’s less and less through command and control, and more and more through changing people’s mindsets and hence altering the way they behave. Today, leadership is being able to mobilize ideas and values that energize other people.3 A leader is a person who exhibits the key attributes of leadership—ideas, vision, values, influencing others, and making tough decisions. Indra Nooyi demonstrates all of these Chapter 1 Learning about Organizational Behavior 5 attributes. Throughout this book, you will develop a deep appreciation for the fact that leadership is like a prism—something new and different appears each time it is looked at from another angle. Our purpose is to identify and describe diverse leadership issues, ideas, and approaches. In doing so, we present various leadership perspectives, along with their strengths, limitations, and applications. We also wrote the book to give you personal insights into your own leadership abilities and those that need further development. Our assumption is simple: Leadership can be learned but not taught. Learning leadership means that you are actively seeking to develop the competencies and make the personal changes required to become a leader.4 In contrast to leadership, management focuses on looking inward, improving the present, tight controls, directing, coordinating, efficiency, and the like. Likewise, in contrast to being a leader, a manager directs, controls, and plans the work of others and is responsible for results. Effective managers bring a degree of order and consistency to the work for their employees. To be effective, managers need to exhibit the attributes of leadership and/or management in various situations. Within business and other types of organizations, all managers are not leaders. Leaders are usually identified by such titles as manager, executive, supervisor, team leader, and the like. We often use the generic title of manager to refer to such individuals. Regardless of title, effective leaders and managers in organizations usually accept three key functions in their roles: • Authority: the right to make decisions, • Responsibility: assignment for achieving a goal, and • Accountability: acceptance of success or failure.5 Table 1.1 provides an overview of the differences between the essentials of contemporary leadership and management. The pairs of attributes within each category are presented as contrasts; however, most managers don’t function at these extreme contrasts. However, patterns that tend toward leadership on the one hand or management on the other hand are likely to emerge as managers develop and utilize their competencies. As you review Table 1.1, think about the relative emphasis placed on leadership or management by a person for whom you have worked. How would you assess Indra Nooyi on each of the contrasts in Table 1.1? Managers may lean more heavily toward either the leadership or management profile at various times as they face different issues and problems. However, most tend to operate primarily in terms of either the leadership or the management profile.6 Being a leader in an organization is not limited to a very few. Consider the remarks by Indra Nooyi: “I believe that each one of PepsiCo’s 185,000 employees is a leader. There are two reasons for this. First, PepsiCo is a meritocracy. Hard work gets recognized and small wins are celebrated. Second, PepsiCo has an entrepreneurial culture, so people have the ability to constantly take risks and seek ways to both improve and grow.”7 Learning Framework The long-term effectiveness of an organization is determined by its ability to anticipate, manage, and respond to changes in its environment. Shareholders, unions, employees, financial institutions, and government agencies, among others, exert numerous and ever-changing pressures, demands, and expectations on the organization. The seven competencies presented in this chapter are linked to the actions of individuals, teams, and organizations as a whole. Throughout this book, therefore, we discuss the relationships among these various competencies and organizational behavior in general. Learning Goal 2. Outline the framework for learning about organizational behavior. 6 Part 1 Introduction and Ethical Foundations TABLE 1.1 Leadership and Management: A Comparison CATEGORY LEADERSHIP Model the Way • Leads by example • Aligns values with actions • Understands your personal values • Imagines exciting possibilities • Appeals to shared aspirations • Paints big picture of what we aspire to be • Takes risks and learns from mistakes • Searches for opportunities to change, grow, and improve • Asks “What can we learn?” • Fosters collaboration by building trust • Shares power and decision making • Actively listens to diverse points of view • Recognizes contributions from others • Celebrates victories • Is passionate about helping others grow Inspire a Shared Vision Challenge the Process Enable Others to Act Encourage from the Heart MANAGEMENT Leads by remote control Tells people what to do Focuses on day-to-day activities Does things right Goes by the book Tight controls Makes all decisions Directs and controls Little recognition of others’ accomplishments Rewards not aligned with results Source: Adapted from Kouzes, J. M., and Posner, B. Z. The Leadership Challenge, 4th ed., San Francisco: Jossey-Bass, 2007; Taylor, T., Martin, B. N., Hutchinson, S., and Jinks, M., Examination of leadership practices of principals identified as servant leaders. International Journal of Leadership in Education, 2007, 10, 401–419; Ergeneli, A., Gohar, R., and Temirbekova, Z., Transfer national leadership: Its relationship to culture value dimensions. International Journal of Intercultural Relations, 2007, 31, 703–725. The framework for learning about organizational behavior and improving the effectiveness of employees, teams, and organizations consists of five basic parts: (1) the key competencies, with particular emphasis on individual and organizational ethics in Chapter 2, that underlie and integrate the next four parts; (2) the individual in organizations; (3) leadership and team behaviors in organizations; (4) the organization itself; and (5) integrating cases at the end of the book, as shown in Figure 1.1. This figure suggests that these parts are not independent of each other. The relationships among them are much too dynamic—in terms of variety and change—to define them as laws or rules. As we discuss each part here and throughout this book, the dynamics and complexities of organizational behavior will become clear. Most of this chapter focuses on explaining each of the seven key competencies that are developed and illustrated throughout the book. The Individual in Organizations Each individual makes assumptions about those with whom she or he works or spends time in leisure activities. To some extent, these assumptions influence a person’s behavior toward others. An effective employee understands what affects her or his own behavior before attempting to influence the behaviors of others. In Part 2, Chapters 3 through 8, we focus on the behavior, attitudes, personality, motivations, Chapter 1 Learning about Organizational Behavior FIGURE 1.1 Learning Framework for Enhanced Individual, Team, and Organizational Effectiveness Part 2: The Individual in Organizations (Chapters 3–8) Part 4: The Organization (Chapters 14–17) Part 1: Introduction and Ethical Foundations (Chapters 1 and 2) Part 3: Leadership and Team Behaviors (Chapters 9–13) Part 5: Integrating Cases; Appendix : BizFlix and stressors of each individual. The individual is the starting point of organizational effectiveness. Understanding the individual is crucial for enhancing individual, team, and organizational effectiveness. Each person is a physiological system composed of various subsystems—digestive, nervous, circulatory, and reproductive—and a psychological system composed of various subsystems—attitudes, perceptions, learning capabilities, personality, needs, feelings, and values. In Part 2, we concentrate on the individual’s psychological system. Both internal and external factors shape a person’s behavior on the job. Among others, internal factors include learning ability, motivation, perception, attitudes, personality, and values. Among the external factors that affect a person’s behavior are the organization’s reward system, groups and teams, managerial leadership styles, organizational culture, and the organization’s design. We examine these and other factors in Parts 3 and 4. Leaders and Teams in Organizations Being inherently social, an individual generally doesn’t choose to live or work alone. Most of the individual’s time is spent interacting with others. Each person is born into a family, worships in groups, works in teams, and plays in groups. A person’s identity is influenced by the ways in which other people and groups perceive and treat that person. For these reasons—and because many managers and employees spend considerable amounts of time interacting with others—a variety of competencies are usually vital to each person, team, and organization as a whole. Effective organizations have leaders who can integrate customer, employee, and organizational goals. The ability of organizations to achieve their goals depends on the degree to which leadership abilities and styles enable managers and team leaders to plan, organize, control, influence, and act effectively. In Part 3, Chapters 9 through 13, we examine how leaders influence others and how individuals can develop their leadership competencies. Effective leadership involves developing multiple competencies. 7 8 Part 1 Introduction and Ethical Foundations How employees communicate with superiors, peers, subordinates, and others can help make them effective team members or lead to low morale, lack of commitment, and reduced organizational effectiveness. For that reason and because most managers and professionals spend considerable amounts of time dealing with others, interpersonal communication is the foundation for this part. The Organization Itself In Part 4, Chapters 14 through 17, we consider the factors that influence individual, team, leader, and organizational effectiveness. Decision making in organizations isn’t particularly orderly or totally within the control of individuals. We identify and explore the phases of decision making and core models of decision making. For effective performance, all employees must clearly understand their jobs and the organization’s design. We identify factors that influence organization design and present some typical designs that facilitate organizational effectiveness. Individuals enter organizations to work, earn money, and pursue career goals. We discuss how employees learn what is expected of them. Basically, they do so by exposure to the organization’s culture. It is the set of shared assumptions and understandings about how things really work—that is, policies, practices, and norms—that are important to supporting, or perhaps diminishing, individual, team, or organizational effectiveness. The management of change involves adapting an organization to the demands of the environment and modifying the actual behaviors of employees. We explore the dynamics of organizational change and present several basic strategies for achieving change to improve organizational effectiveness. Competencies for Individual, Team, and Organizational Effectiveness The first part in Figure 1.1 is competencies for individual, team, and organizational effectiveness, with special emphasis on ethical foundations. Seven competencies are the focus of this chapter. With the exception of the self competency, which is inherent to individuals, the other six competencies apply to individuals, teams, and the organization as a whole. Indra Nooyi has developed a mosaic of individual competencies over time that enables her to be a successful leader at PepsiCo. A competency is an interrelated cluster of knowledge, skills, and abilities needed by an individual, team, or organization for effective performance. A number of competencies are critical to the effectiveness and performance of most organizations.8 The seven key competencies affect the behavior and effectiveness of each individual, team, and organization. Our emphasis is on the human side of the organization. The competencies apply to individuals and teams in all functional areas and levels of the organization as well as the organization as a whole. There are a number of other functional competencies (marketing, planning, accounting, finance, production, personnel, and so on) as well as technical competencies that are essential for individual, team, and organizational effectiveness. The competencies emphasized are important to the effectiveness of virtually all employees, not just those in managerial and leadership roles. One of the goals of this book is to define, describe, and illustrate how the seven key competencies can be used by individuals, teams, and members of the entire organization. These ideas are woven into the discussion of organizational behavior and effectiveness throughout. Another goal of this book is to help you to fully understand and further develop these seven competencies. Before reading further, we invite you to assess yourself in these seven key competencies. Again, with the exception of the self competency, these competencies also need to be understood, developed, and applied at the team Chapter 1 Learning about Organizational Behavior 9 and organizational levels. They are developed throughout the book. Go to the end of this chapter and complete the Key Competencies Self-Assessment Inventory on pages 27–28. Figure 1.2 suggests that these competencies are interrelated and that drawing rigid boundaries between them isn’t feasible. Moreover, this figure conveys that the ethics competency plays a foundational role in implementing the other six competencies. All of the competencies are discussed in considerable depth in specific chapters. Many leading organizations use competency frameworks, including the types of competencies we use. The competencies are used to select, develop, assess, and promote employees to foster team and organizational effectiveness. A few of these organizations include PepsiCo, Bank of America, Exxon-Mobil, John Hancock, Merck & Co., and AT&T.9 Why do they use competency models? For years, many top-level executives believed that there were two ways to think about identifying successful individuals. From a selection perspective, the approach was to identify the common characteristics of effective individuals and try to identify them early in their career. The other perspective was to identify those employees who management thought were best able to take advantage of developmental opportunities, if provided. At the individual level, the competency-based approach identifies employees who can develop or possess key competencies and provides them with challenging opportunities to learn. Throughout this book, there are opportunities to learn how successful leaders, employees, teams, and the organization as a whole use these competencies. One successful outcome of using this book is your further development of the competencies needed to be an effective professional or leader and to understand how they apply to teams and the organization as a whole. FIGURE 1.2 Competencies for Individual, Team, and Organizational Effectiveness Self Change Diversity Ethics Across Cultures Teams Communication Note: These competencies focus on the human side of the organization. They apply to individuals and teams in all functional areas and levels of the organization as well as the organization as a whole. There are a number of other functional competencies (marketing, planning, accounting, finance, production, personnel, and so on) as well as technical competencies that are essential for individual, team, and organizational effectiveness. 10 Part 1 Introduction and Ethical Foundations Learning Goal 3. Describe the ethics competency and its contribution to effective performance. Ethics Competency The ethics competency includes the knowledge, skills, and abilities to incorporate values and principles that distinguish right from wrong when making decisions and choosing behaviors. Ethics are the values and principles that distinguish right from wrong.10 Key Attributes The key attributes of the ethics competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following: • Identifying and describing the principles of ethical decision making and behavior. Ethics Insight • Assessing the importance of ethical issues in considering alternative courses of action. The decision to shop at Senior leaders typically emphasize the Walmart versus Best Buy is not related to any ethical issue of importance of performance and the bottom consequence for most individuals. In contrast, when purchasline. But if they don’t also emphasize ethical ing a new car, some individuals consider the gasoline mileage behavioral messages, then all employees an important ethical issue that allows them to make a decihear is that it’s all about the numbers. Get sion to help reduce air pollution to improve the atmosphere. the numbers at all costs, they think—and • Applying governmental laws and regulations, as well as the that causes some to compromise ethics. employer’s rules of conduct, in making decisions. In general, Ronald James, President and CEO, Center for Ethical the greater a person’s level of responsibilities and authority, Business Cultures the more the person is likely to face increasingly complex and ambiguous ethical issues and dilemmas. For example, an associate at Best Buy does not make decisions about purchasing goods from foreign countries that often involve ethical issues. The associate has no authority and responsibility in this decision-making area at Best Buy. Demonstrating dignity and respect for others in working relationships, such as • taking action against discriminatory practices as individually feasible and in terms of a person’s position. The manager at a Walmart store is more able to stop an employee from showing disrespect to members of a minority group than is a checkout associate in the store. • Being honest and open in communication, limited only by legal, privacy, and competitive considerations (e.g., do what you or the organization say and say what you or the organization do). Ethical Dilemmas The ethical issues facing organizations, leaders, and other employees have grown significantly in recent years, fueled by public concern about how business is conducted. This point is developed through Ethics Competency features throughout the book. Ethical behavior can be difficult to define, especially in a global economy with its varied beliefs and practices. Although ethical behavior in organizations clearly has a legal component, it involves more than that. Managers, employees, and organizations alike face situations in which there are no clear right or wrong answers. An ethical dilemma occurs when a decision must be made that involves multiple values. An ethical dilemma doesn’t always involve choosing right over wrong because there may be several competing values. Some ethical dilemmas arise from competitive and time pressures, among other factors.11 Consider these two real-life examples of ethical dilemmas: • A fellow employee told me that he plans to quit the company in two months and start a new job that has been guaranteed to him. Meanwhile, my manager told me that she wasn’t going to give me a new opportunity in our company because she was going to give it to my fellow employee now. What should I do? Chapter 1 • Learning about Organizational Behavior The vice president told me that one of my subordinates is among several to be laid off soon and that I’m not to tell him yet or he might tell the whole organization, which would soon be in an uproar. Meanwhile, I heard from my subordinate that he plans to buy braces for his daughter and new carpet for his house. What should I do?12 Top-management leadership, policies and rules, and the prevailing organizational culture can do much to reduce, guide, and help individuals, teams, and organizations confront and resolve ethical dilemmas.13 Robert Eckert is the chairman and chief executive officer of Mattel, Inc., which is headquartered in El Segundo, California. Mattel is a worldwide firm that designs, manufactures, and markets toys and family products. The firm has 30,000 employees in 43 countries.14 Several years ago, Mattel had recalls of 18 million toys with potentially harmful tiny magnets and 1.5 million toy railroad sets with impermissible lead paint levels. Eighty percent of the world’s toys are manufactured in China by outsourcing to approximately 5,000 Chinese contractors.15 How this happened and what Mattel has done to strengthen its safety and testing standards since this crisis are beyond our scope here; however, the following Ethics Competency feature focuses on the transparent and assertive ways in which Eckert strived to ethically address this crisis.16 This feature also reflects the communication competency of Eckert. It presents a few excerpts of Eckert’s statements on coping with this crisis. Ethics competency When the tough times hit at Mattel, consumers wanted to hear directly from me on how the company was addressing the issues. In order to maintain consumer trust in Mattel through those difficult weeks, I had to be visible. Taking responsibility was simply the right thing to do. I had to communicate widely and talk about the problems we were facing as both a company and an industry. I had to tell people how we were fixing things. That communication effort was very personal to me because it consisted of some of the most grueling days I’ve experienced in my professional career—from extremely tough media interviews to conversations with our business partners, and from testimony at congressional hearings to direct communications with consumers through videos on our website and other means. Employee communications were especially important during this time. I sent numerous company-wide e-mails as we made our way through the crisis to keep employees informed about what was happening, so that they didn’t first read about it in the morning newspaper. During KARL-JOSEF HILDENBRAND/DPA/LANDOV Robert A. Eckert, Chairman and CEO, Mattel, Inc. Robert A. Eckert, Chairman and CEO of Mattel, Inc. 11 12 Part 1 Introduction and Ethical Foundations Mattel’s recalls, we had a crisis team that met daily in person or by phone and I made it a point to participate. People, no matter how senior or how experienced, need leadership during challenging times. As the CEO, I knew it was my responsibility to set the tone for how the company responded by making the tough calls in full view of the team. I believe that in order to solve these challenges, unwavering integrity is one of the most important characteristics a leader can possess for effective and ethical crisis management throughout the organization. Placing blame is not only divisive, but also wastes valuable time when people should be working together toward solutions. Leaders need to empower people and teams to make decisions and set an ethical tone through example. As an organization, I believe that Mattel has embraced a difficult test of our company and found the opportunity to become better. As an organization, we have been open about the issues we face and how we are acting to fix those issues. And we are committed to facing future challenges in the same way: with integrity—out of the shadows, and on the ethical course. To learn more about Mattel, go to www.mattel.com. Learning Goal 4. Describe the self competency and its contribution to effective performance. Self Competency The self competency includes the knowledge, skills, and abilities to assess personal strengths and weaknesses, set and pursue professional and personal goals, balance work and personal life, and engage in new learning. Key Attributes The key attributes of the self competency include the knowledge, skills, and abilities of individuals to be effective in doing the following: • Understanding one’s own and others’ personality and attitudes. • Perceiving, appraising, and interpreting accurately oneself and others. • Understanding and acting on one’s own and others’ work-related motivations and emotions. • Assessing and establishing one’s own developmental, personal (life-related), and work-related goals. • Taking responsibility for managing oneself and career over time and through stressful circumstances. The self competency is the most individual-focused of the seven competencies. Its achievement creates the underlying personal attributes needed for successfully developing the other six competencies. For example, it is not possible to develop the communication competency if the individual is unable to perceive, appraise, and interpret individual differences and attitudes. We continue our discussion of Indra Nooyi’s journey to understand how her self competency developed.17 Self competency Indra Nooyi’s Development Journey Nooyi learned early on to embrace diversity rather than hide her differences in the corporate world. Long fascinated by the opportunities and culture of America, after working for a time in India, she headed to the United States. Coming out of Yale in 1980 with a master’s in public and Chapter 1 private management, Nooyi wore a sari to an interview at Boston Consulting Group and was offered the job. She later held corporate strategy posts at Motorola, Inc. and what is now ABB Group. She was drawn to PepsiCo by the chance to make a difference in a company that was struggling. At PepsiCo, Nooyi has long been known for two things: a keen business sense and an irreverent personal style. The combination became obvious soon after she joined the company as its chief strategist some years ago. She pushed Chief Executive Roger Enrico to spin off Taco Bell, Pizza Hut, and KFC in 1997 because she didn’t feel PepsiCo could add enough value to the fast-food business. She later was instrumental in the purchase of Tropicana, the spinoff of Pepsi’s bottling business, and the $13 billion merger with Quaker Oats Co. Each of these strategic moves has paid off financially. “She challenges you,” says Tim Minges, president of the Asia Pacific region. When his team couldn’t find an inexpensive alternative to palm oil for its products in Thailand, she kept pushing and pushing, saying, “I hear you, I hear you, so what’s the right solution?” until they came up Learning about Organizational Behavior with one: rice bran oil. Minges continues: “Don’t try to delegate up, because she will bounce it right back in your face.” Nooyi says she wishes she had reacted differently to allegations in India that traces of pesticide had been found in both Pepsi and Coke. The company denied the claims and did scientific analysis to support its position. At the time, it was not her direct responsibility. However, Nooyi reflects: “I was the face of India. I should have hopped on a plane right away and said, ‘Guys, I assure you, these products are the safest.’ At that point, it didn’t occur to me. That’s the thing I regret. Now if it happened—man, I would be there in an instant.” In a recent speech, Nooyi stated: “We’re in the midst of transformation done willingly, voluntarily, and enthusiastically not in response to legislation or litigation. Our Performance with a Purpose philosophy includes fostering a culture where employees feel valued—looking for ways to advance minorities and women. The company also gives employees time and opportunities to volunteer with causes. We want people to look at this company and think it is the model for how to conduct business in the global world.” To learn more about PepsiCo, go to www.pepsico.com. Career Development A career is a sequence of work-related experiences occupied by a person during a lifetime.18 It embraces attitudes and behaviors that are part of ongoing work-related tasks and experiences. The popular view of a career usually is restricted to the idea of moving up the ladder in an organization. At times, this opportunity is no longer available to many people because of downsizing, mergers, and the increasing tendency of managers to place the responsibility on employees to develop their own competencies. A person may remain at the same level, acquiring and developing new competencies, and have a successful career without ever being promoted. A person also can build a career by moving among various jobs in different fields, such as accounting, management information systems, and marketing, or among organizations such as Toyota, IBM, and Nike. Thus, a career encompasses not only traditional work experiences but also the opportunity for career alternatives, individual choices, and individual experiences.19 Let’s briefly consider five aspects of a career: • The nature of a career in itself doesn’t imply success or failure or fast or slow advancement. Career success or failure is best determined by the individual, rather than by others. • No absolute standards exist for evaluating a career. Career success or failure is related to a person’s self-concept, goals, and competencies. An individual should 13 14 Part 1 Introduction and Ethical Foundations evaluate her own career goals and progress in terms of what is personally meaningful and satisfying. Unfortunately, too often the individual falls into the trap of comparing his own career progress to that of others. This can undermine the person’s experience of career success. An individual should examine a career both subjectively and objectively. • Subjective elements of a career include one’s values, attitudes, personality, and motivations, which may change over time. Objective elements of a career include job choices, positions held, income earned, challenges overcome, and competencies developed. • Career development involves making decisions about an occupation and engaging in activities to attain career goals. The central idea in the career development process is time. The shape and direction of a person’s career over time are influenced by many factors (e.g., the economy, availability of jobs, skill acquisition, personal characteristics, family status, and job history).20 • Cultural factors play a role in careers. Cultural norms in countries such as Japan, the Philippines, and Mexico also influence the direction of a person’s career. By U.S. standards, women are discriminated against as managers in these cultures. In India and South Korea, social status and educational background often influence an individual’s career paths. Ralph Waldo Emerson’s classic essay “Self-Reliance” offers good advice for a person’s career: “Trust thyself.” To be successful, the individual needs to commit to a lifetime of learning, including the development of a career plan. A career plan is the individual’s choice of occupation, organization, and career path. Learning Goal 5. Describe the diversity competency and its contribution to effective performance. Diversity Competency The diversity competency includes the knowledge, skills, and abilities to value unique individual, group, and organizational characteristics, embrace such characteristics as potential sources of strength, and appreciate the uniqueness of each.21 This competency includes the ability to help people work effectively together even if their interests and backgrounds are different. At PepsiCo, the importance of the diversity competency is illustrated by Indra Nooyi: “It’s important to create an inclusive culture: a place where people can ‘bring their whole selves to work.’ A place where diverse values, beliefs, and practices are treated with respect.”22 Diversity Insight To truly understand the needs of our customers and consumers—and succeed in the marketplace—PepsiCo must reflect that diversity in our employees, our suppliers and in everything we do. Offering a workplace where diversity is valued helps us build the top-quality workforce so crucial to our success—by enabling us to attract and retain great people from a wide spectrum of backgrounds. Ronald G. Parker, Chief Diversity and Inclusion Officer, PepsiCo Key Attributes The key attributes of the diversity competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following: • Fostering an environment of inclusion with people who possess characteristics different from themselves. • Learning from individuals, teams, or organizations with different characteristics, experiences, perspectives, and backgrounds. Diversity of thought and behavior is vital to stimulating creativity and innovation. • Embracing and developing personal, team, or organizational tendencies—such as conscientiousness and attitudes that demonstrate respect for people of other cultures and races—that support diversity in the workplace and elsewhere. Chapter 1 Learning about Organizational Behavior • Communicating and personally practicing a commitment to work with individuals and team members because of their talents and contributions, regardless of their personal attributes. • Providing leadership—walk the talk—in confronting obvious bias, promoting inclusion, and seeking win–win or compromise solutions to power struggles and conflicts that appear to be based on diversity issues. Applying governmental laws and regulations as well as organizational policies and regulations concerning diversity. • 15 Categories of Diversity As suggested in Figure 1.3, diversity includes many categories and characteristics. Even a single aspect of diversity, such as physical abilities or heredity, contains various characteristics that may affect individual, team, or organizational behaviors. One challenge for the individual is to determine whether those effects (1) deny opportunity and are counterproductive, (2) simply reflect a tolerance of differences, or (3) lead to embracing diversity as a value-added organizational resource. A second challenge is to assist others in valuing and embracing diversity as a source of creativity and strength. Figure 1.3 identifies the more common categories of diversity dealt with in organizations. They are subdivided into primary categories—genetic characteristics that affect a person’s self-image and socialization—and secondary categories—learned characteristics that a person acquires and modifies throughout life. As suggested by FIGURE 1. 3 Selected Categories of Diversity Primary Categories Age Secondary Categories Race Education Ethnicity Work experience Gender Income Physical abilities and qualities Marital status Effects on Organizational Behavior Religious beliefs Sexual and affectional orientation Geographic location Parental status Behavioral style Other Source: Adapted from Bradford, S. Fourteen dimensions of diversity: Understanding and appreciating differences in the workplace. In J. W. Pfeiffer (ed.), 1996 Annual: Volume 2, Consulting. San Diego: Pfeiffer and Associates, 1996, 9–17. 16 Part 1 Introduction and Ethical Foundations the arrows, these categories aren’t independent. For example, a woman (gender) with children (parental status) is likely to be directly affected by an organization with familyfriendly or family-unfriendly policies and attitudes. An example of a family-unfriendly attitude would be “Your job must always come first if you are to get ahead in this organization.” Primary Categories The following are brief explanations of the primary categories of diversity. Individuals have relatively little influence over these characteristics. • Age: the number of years a person has been alive and the generation into which the individual was born in the United States [e.g., baby boomers born from 1946 through 1964; Generation X born from 1965 through 1981, or Generation Y (Millennials) born from 1982 through 2000]. • Race: the biological groupings within humankind, representing superficial physical differences, such as eye shape and skin color. Race accounts for less than 1 percent of the difference in a person’s genetic heredity. Ethnicity: identification with a cultural group that has shared traditions and • heritage, including national origin, language, religion, food, and customs. Some people identify strongly with these cultural roots, others do not. • Gender: biological sex as determined by XX (female) or XY (male) chromosomes. • Physical abilities and qualities: a variety of characteristics, including body type, physical size, facial features, specific abilities or disabilities, and visible and invisible physical and mental talents or limitations. • Sexual and affectional orientation: feelings of sexual attraction toward members of the same or opposite gender, such as heterosexual, homosexual, or bisexual. Secondary Categories The following are brief explanations of the secondary categories of diversity. Individuals have relatively more influence over them during their lifetimes by making choices. • Education: the individual’s formal and informal learning and training. • Work experience: the employment and volunteer positions the person has held and the variety of organizations for which the person has worked. • Income: the economic conditions in which people grow up and their current economic status. • Marital status: the person’s situation as never married, married, widowed, or divorced. • Religious beliefs: fundamental teachings received about deities and values acquired from formal or informal religious practices. • Geographic location: the location(s) in which the person was raised or spent a significant part of her life, including types of communities and urban areas versus rural areas. • Parental status: having or not having children and the circumstances in which the children are raised, such as single parenting and two-adult parenting. • Behavioral style: tendency of the individual to think, feel, or act in a particular way. The primary categories of diversity are discussed throughout the book. In the following feature, a few highlights of the diversity competency for one organization are provided. Aetna is widely recognized for its Diverse Discoveries Program.23 A few Chapter 1 Learning about Organizational Behavior 17 characteristics of their program are presented in the following feature. Aetna, Inc., headquartered in Hartford, Connecticut, is a major provider of all types of insurance and pension products. It has over 35,000 employees.24 Diversity competency Aetna’s Diverse Discoveries Program Ron Williams, the chairman and CEO of Aetna, introduces what it means to embrace diversity: We see diversity as a strategic business advantage: The simple act of knowing that what works for some might not work for all is what makes our commitment to diversity come to life every day. Our commitment becomes action when we take our understanding of differences and apply that insight to everything from how we service customers and design products to how we communicate with each other. Each year, every Aetna employee completes web-based diversity training. It is designated to raise awareness of diversity and addresses the business case for diversity. Diversity in Action lectures assist employees in thinking about diversity in new and different ways. A Leadership Development Program focuses on identifying and developing needed competencies among underrepresented groups. A talent acquisition strategy aims to attract motivated individuals, including members of underrepresented groups, and a commitment to their development. The support of employee resource groups allows employees to share their cultures, give back to the communities, network with senior management, and attain career-building competencies. Three of these eight resource groups include African American Resource Group, Hispanic Employee Resource Group, and Women’s Employee Resource Group. How have these and other diversity values and initiatives at Aetna made a difference? A variety of external groups have recognized Aetna for its leadership and commitment to diversity, such as Black Enterprise magazine, the National Association for Women Executives, DiversityInc, and CRO magazine. Of approximately 35,000 employees, 76 percent are women and 31 percent are people of color. Women represent 64 percent of management/supervisory positions, and people of color represent 16 percent. Eleven percent of senior leaders are people of color and 30 percent are women. To learn more about Aetna, go to www.aetna.com. Across Cultures Competency The across cultures competency includes the knowledge, skills, and abilities to recognize and embrace similarities and differences among nations and cultures. Culture is the dominant pattern of living, thinking, feeling, and believing that is developed and transmitted by people, consciously or unconsciously, to subsequent generations.25 For a culture to exist, it must • be shared by the vast majority of the members of a major group or entire society; • be passed on from generation to generation; and • shape perceptions, judgments, and feelings as well as subsequent decisions and behavior.26 As discussed further in Chapter 3, a key feature of a culture is its cultural values—those deeply held beliefs that lead to general preferences and behaviors and views of what is right and wrong. Cultural values are reflected in a society’s morals, customs, and established practices. Learning Goal 6. Describe the across cultures competency and its contribution to effective performance. 18 Part 1 Introduction and Ethical Foundations Key Attributes The key attributes of the across cultures competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following: • Understanding and appreciating the characteristics that make a particular culture unique and are likely to influence behavior. • Understanding how work-related values, such as individualism and collectivism, influence the decisions made by individuals and groups. • Understanding, leading, and motivating employees with different values and attitudes. These may range from the more individualistic, Western belief, to paternalistic, non-Western attitudes, to the extreme “the state-will-take-care-of-me” collectivist mind-set. Communicating in the language of the host country in which the individual is • working. This ability is crucial for employees who have ongoing communications with people whose native language is different from their own. • Working with those from foreign countries. This ability applies if the assignment is abroad or the person has international responsibilities from the home office. • Addressing leadership, organizational, and other issues through a global mind-set—viewing the environment from a worldwide perspective, always looking for unexpected trends that may create threats or opportunities for a unit or an entire organization. Some call this the ability to think globally, act locally. Avoiding Stereotypes The development of the across cultures competency is useful for diagnosing, understanding, and relating to individuals with different cultural values. Of course, there may be wide variations of behavior and values by various individuals and groups within a given society. There is a need to be wary of stereotyping others in a particular society by glossing over the nuances and complexities of a culture.27 Furthermore, specific issues and situations—such as work, family, friends, and recreation—can play a significant role in understanding the impact of different cultural values on behaviors. For example, when Japanese businesspeople develop contracts, they want them to be more general than detailed, as preferred by U.S. managers. They believe that those entering into an agreement are joined together and share something in common; thus, they should rely on and trust one another. Carlos Ghosn is the cochairman, president, and CEO of Nissan Motor Co. Ltd. As a result of an alliance between Nissan and Renault in 2005, he also serves as CEO of Renault.28 The following Across Cultures Competency feature provides several insights on Ghosn’s across cultures leadership.29 Across Cultures competency Carlos Ghosn, CEO, Nissan-Renault J. Frank Brown, dean of INSEAD, a leading business school in France, comments: “Increased globalization is changing the landscape of the business climate and creating a demand for business leaders who can operate in and across different cultures. Carlos Ghosn personifies the essence of a transcultural leader by recognizing that cultural diversity is an Chapter 1 integral component to his organization’s future success.” Ghosn notes: “I think one of the basics of transcultural leadership is empathy and respect. It is essential for leaders to develop a deeper understanding of the country and the culture in which they operate and try to learn about its strengths. I would say even though the term today is not very popular, love the country and love the culture in which you are in. And try to learn about its strengths, don’t focus on the weaknesses, and make sure that all the people you are transferring with you are of the same opinion. If you have to work and particularly do something significant in a country, it is much easier if somehow you connected with the country and you like the country and you respect the people and you are curious about the culture.” One of Ghosn’s tasks was to help revive Nissan, but Ghosn contends the experience Learning about Organizational Behavior 19 wasn’t simply about performing a job—it was about discovering a new culture and it was very rewarding. He states: “When you have a very diverse team—people of different backgrounds, different culture, different gender, different age, you are going to get a more creative team— probably getting better solutions, and enforcing them in a very innovative way and with a very limited number of preconceived ideas.” Ghosn says that when he started at Nissan, only 1 percent of the top management at Nissan were women. Although that was twice as good as his competitors, he was determined to increase the number of women in management still further. Today, the number of women in management is 5 percent, and the goal is to raise that figure to 10 percent within a few years. Ghosn says that, although such targets are good, it’s more important to set a lasting, achievable trend for women that will prove that diversity delivers. To learn more about Nissan, go to www.nissan-global.com. Communication Competency The communication competency includes the knowledge, skills, and abilities to use all the modes of transmitting, understanding, and receiving ideas, thoughts, and feelings—verbal, listening, nonverbal, and written—for accurately transferring and exchanging information.30 This competency may be thought of as the circulatory system that nourishes the other competencies. Just as arteries and veins provide for the movement of blood in a person, communication allows for the exchange of information and feelings. The communication competency is a strength of Indra Nooyi. Recall her comment in the Learning from Experience feature: “In business, sometimes in the heat of the moment, people say things. You can either misconstrue what they’re saying and assume they are trying to put you down, or you can say, ‘Wait a minute. Let me really get behind what they are saying to understand whether they’re reacting because they’re hurt, upset, confused, or they don’t understand what it is I’ve asked them to do.’” Key Attributes The key attributes of the communication competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following: • Conveying information, ideas, and emotions to others in such a way that they are received as intended. This ability is strongly influenced by a person’s describing skill—identifying concrete, specific examples of behavior and its effects. This skill also includes recognizing that the communicator needs to avoid the tendency to jump quickly to generalizations and judgments. • Providing constructive feedback to others. Learning Goal 7. Describe the communication competency and its contribution to effective performance. 20 Part 1 Introduction and Ethical Foundations Engaging in active listening—the process of integrating information and emotions in a search for shared meaning and understanding. Active listening requires the use of the questioning skill—the ability to ask for information and opinions in a way that gets relevant, honest, and appropriate responses. This skill helps to bring relevant information and emotions into the dialogue and reduce misunderstandings. Using and interpreting nonverbal communication—facial expressions, body • movements, physical contact, and symbols that are often used to send messages. The empathizing skill refers to detecting and understanding another person’s values, motives, and emotions. It is especially important in nonverbal communication and active listening. The empathizing skill helps to reduce tension and increase trust and sharing. • Engaging in verbal communication effectively—presenting ideas, information and emotions to others, either one to one, between teams, or between organizations. In a recent speech, Indra Nooyi demonstrated this personal ability when she stated: “It’s vital that people are shown respect by speaking to them with truth and candor. Give people honest feedback. Let them know where they stand. Be clear about what they need to do to improve or to reach their career goals. In this same vein, managers must be approachable. Associates need to feel that they are able to talk to their leaders informally to address issues and ask questions.”31 • Engaging in written communication effectively—the ability to transfer data, information, ideas, and emotions by means of reports, letters, memos, notes, and e-mail. • Using a variety of computer-based (electronic) resources, such as e-mail and the Internet. Through an array of computer-based information technologies, the Internet directly links organizations and their employees to customers, suppliers, information sources, the public, and millions of individuals worldwide. We help you develop this skill throughout the book by presenting numerous Internet addresses and encouraging you to learn more about the organizations, issues, and people discussed. In the following feature, we provide several examples of the communication competency, especially active listening, exhibited by Maureen Chiquet, the Global CEO of Chanel S.A.32 Chanel is a private corporation headquartered in Paris, France. The firm specializes in luxury goods, handbags, perfumes, and cosmetics. It operates boutiques across the world.33 • Communication competency Maureen Chiquet, Global CEO, Chanel S.A. In retail, you’ve got to have a strong point of view and present it effectively. But to lead effectively and achieve real business results as the head of any enterprise, you have to listen. You’ve got to constantly ask questions and seek out diverse opinions, and remain humble enough to change your mind—whether about a product or a person. Whenever I’m in a Chanel boutique, I ask the store employees what’s selling, how consumers are responding, and what we should be doing differently. Their observations help me refine my own thoughts about the business— and sometimes change my mind outright about a piece of merchandise or even a big strategy. Back in the office, I spend about 75 percent of my time listening to my direct reports’ insights, and I make regular dates with our partners around the world to hear their perspectives, too. I’m always seeking information from as many varied sources as possible: I’ll check YouTube, for example, just to see what people are watching. I keep my ears open and my eyes peeled for new trends in culture, the arts, film, theater, and the like. Listening has its drawback because sometimes you realize that people are just telling you what they want you to hear. Yet, ultimately, what’s good for this business—surrounding myself with talented teams and relying on their expertise—is good for me personally, too. Learning about Organizational Behavior 21 JEAN-MARC CHARLES/PHOTOLIBRARY Chapter 1 Chanel store in Paris, France. To learn more about Chanel S.A., go to www.chanel.com. Teams Competency The teams competency includes the knowledge, skills, and abilities to develop, support, and lead groups to achieve goals.34 Howard Guttman, author of Great Business Teams, has studied over 300 executive teams.35 He comments: Leadership is no longer about one-person rule. Today’s organizations are too complex and far-flung for the “leader” to make all the decisions. That doesn’t mean that organizations should be ruled by consensus—that’s dysfunctional, because it’s virtually impossible to get everyone to agree on every issue. Effective leaders balance the need for speed and a quality outcome with the need to involve members of their team.36 Key Attributes The key attributes of the teams competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following: • Determining the circumstances in which a team approach is appropriate and, if using a team is appropriate, the type of team to use. • Engaging in and/or leading the process of setting clear performance goals for the team. • Participating in and/or providing the leadership in defining responsibilities and tasks for the team as a whole, as well as its individual members. • Demonstrating a sense of mutual and personal accountability for the achievement of team goals, not just an individual’s own goals. That is, the individual doesn’t approach problems and issues with a mind-set of “That’s not my responsibility or concern.” • Applying decision-making methods and technologies that are appropriate to the goals, issues, and tasks confronting the team. Learning Goal 8. Describe the teams competency and its contribution to effective performance. 22 Part 1 Introduction and Ethical Foundations • • Resolving personal and task-related conflicts among team members before they become too disruptive. Assessing a person’s own performance and that of the team in relating to goals, including the ability to take corrective action as needed. Teams and Individualism People in some countries strongly believe in the importance and centrality of the individual. In the United States, the United Kingdom, and Canada, educational, governmental, and business institutions frequently state that they exist to serve individual goals. As we discuss further in Chapter 3, two cultural values that strongly affect decisions about whether to use teams and groups in organizations are individualism and collectivism. Employees in individualistic cultures are expected to act on the basis of their personal goals and self-interest. In collectivistic countries, such as China and South Korea, the use of teams by organizations is a natural extension of their nations’ cultural values. Uneasiness revolves around the relative influence of individuals in teams. We might characterize the basic difference as “fitting into the team” versus “standing out from the team.” Even in societies that value individualism, teams are widely used in such firms as Mattel, PepsiCo, and Hewlett-Packard (HP). The potential for teams and individuals to have incompatible goals clearly exists, but these goals need not always be in conflict. In fact, they often are compatible.37 The potential strengths and weaknesses of teams is captured in the following statements: (1) teams do exist, and employees need to take them into account; (2) teams mobilize powerful forces that influence individuals; (3) teams may create both good and bad results; and (4) teams can be managed to increase the benefits from them. Grant Reid is the president of Mars Drinks North America, headquartered in West Chester, Pennsylvania. This firm provides a wide variety of nonalcoholic beverages, coffees, teas, and the like under the Flavia brand. It is a subsidiary of Mars, Inc., a privately owned firm. In the following Teams Competency feature, Grant Reid’s evolving perspective on teams is presented.38 Teams competency Grant Reid, President, Mars Drinks My thought process around leadership used to be that I would make decisions, everyone would come in, I would give them the charter for the day, and they would all run off. Now, I recognize that it’s not about me—it’s about getting the right team together, with the right expertise in that particular area, and getting the best out of that team. No one is as smart as everyone. There are lots of meetings I no longer need to go to. If you’re command-and-control, you have to be there to command and control; no major decision, no major recommendation can move forward without you there. When you have teams capable of making decisions, there are a lot of things you can let go. When I took over Mars Drinks, we were meeting globally, as a management team, every month. People were flying in from America and different parts of Europe; it was very time consuming. Now, we meet four times a year. We have scheduled telephone conversations with the whole team once a month so everybody’s clear on what they’re doing, and then we get on with it. You can’t keep setting up teams that do nothing, because the first thing that happens is that teams sit down and say, “OK, what are we trying to achieve here?” And if there’s no real goal, each of the team members will want out. It’s a self-governing process. Back in the 1980s, when I was working in Europe, you’d have teams that were more like bagel clubs—everybody would come in, have a nice chat. Everybody was pleasant to each other; nobody really called anybody out; if somebody said something that didn’t make any sense, it was glossed over. The difference now is that people here ask, “What are we trying to achieve here?” And if you can’t answer that question, then chances are that team doesn’t have a purpose. Learning about Organizational Behavior 23 JUSTIN HORROCKS/ISTOCKPHOTO.COM Chapter 1 Teams should meet with a clear goal in mind. To learn more about Mars, Inc., go to www.mars.com. Change Competency The change competency includes the knowledge, skills, and abilities to recognize and implement needed adaptations or entirely new transformations in the people, tasks, strategies, structures, or technologies.39 The challenge of change is well stated by Grant Reid, the focus of the preceding Teams Competency feature when he adds: “In my experience, when you bring people together, everybody’s uncomfortable with change to different degrees. Some say, ‘OK, I get this,’ and others say, ‘This is never going to work in my lifetime.’ Those people frequently self-select and go off and do something else. For the others, the team will hold them accountable.’”40 Key Attributes The key attributes of the change competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following: • Applying the six previously discussed competencies in the diagnosis, development, and implementation of needed changes. • Providing leadership in the process of planned change. The approaches to change vary under different conditions. • Diagnosing pressure for and resistance to change in specific situations. These pressures may be internal—such as the organizational culture—or external—such as new technologies or competitors. • Applying processes to introduce and achieve organizational change. This includes the ability to identify key issues and diagnose them by examining the basic factors of who, what, why, when, where, and how. • Seeking, gaining, sharing, and applying new knowledge in the pursuit of constant improvement, creativity, and entirely new approaches or goals.41 The following Change Competency feature provides additional insights by Indra Nooyi. It reveals several aspects of her effectiveness in leading major changes at PepsiCo.42 Of course, Nooyi is the first to acknowledge that these changes are a result of many individuals at PepsiCo. Recall the opening Learning from Experience feature in which we highlighted Nooyi’s Performance with Purpose vision, which rests on three pillars: human sustainability, environmental sustainability, and talent sustainability. Learning Goal 9. Describe the change competency and its contribution to effective performance. 24 Part 1 Introduction and Ethical Foundations Change competency Indra Nooyi Leads Change at PepsiCo Since becoming CEO, Nooyi has reorganized PepsiCo to make it less focused on just the United States and broadened the top leadership team. She has hired an Italian native, Massimo d’Amore, to lead the division that includes the troublesome U.S. soft drink business. She recruited a former Mayo Clinic endocrinologist to head up the research and development division. PepsiCo recently spent $1.3 billion on acquisitions such as Naked Juice, a California maker of soy drinks and organic juice. According to Nooyi, it essentially boils down to balancing the profit motive with making healthier snacks, striving for a net-zero impact on the environment, and taking care of the workforce. She asserts: “If all you want is to screw this company down tight and get double-digit earnings growth and nothing else, then I’m the wrong person. Companies today are bigger than many economies. We are little republics. We are engines of efficiency. If companies don’t do responsible things, who is going to? Why not start making change now?” In a speech to the food industry, Nooyi pushed the group to tackle obesity. She asked: “Do you remember campaigns like ‘Keep America Beautiful’? What about ‘Buckle Up’? I believe we need an approach like this to attack obesity. Let’s be a good industry that does 100% of what it possibly can—not grudgingly but willingly. I am extremely proud of our track record. Name me one other company that took out trans fats from all its products without increasing the price of its products—four or five years before anyone else. We’re doing everything possible to shift our portfolio to ‘better for you’ or ‘good for you’ products.” In an interview, Nooyi notes: “I do market tours all the time. Every weekend I hop in the car and go somewhere. I listen to kids talk about what they’re consuming, what they’re doing, what they’re not doing. I read a range of things to keep in touch with cultural and lifestyle trends—the usual business press but also People and Vanity Fair and anything close to the cutting edge of the culture. Even the AARP magazine.” Confronted by high commodity prices, a downturn in U.S. beverage sales, and other consequences of the souring economy in 2008 and 2009, Nooyi concluded some bold steps were necessary. She launched an aggressive belt-tightening program to generate more than $1.2 billion in savings by 2011. Nooyi says the tough measures—including the elimination of 3,300 jobs (much of which will be achieved through normal turnover) and the closing of some plants—were necessary to put PepsiCo ahead of the curve in a fast-changing economic environment. Most of the savings from cost cutting will be invested in fast-growing emerging markets, the U.S. beverage business, and accelerating development of new beverages and snacks. To learn more about PepsiCo, go to www.pepsico.com. Blur: Constant Change New technologies are increasing the need for constant learning, adaptation, and innovation by individuals, teams, and entire organizations.43 In Blur: The Speed of Change in the Connected Economy, S. Davis and C. Meyer proposed a formula to represent the rapidly accelerating rate of technological and other changes: Speed × connectivity × intangibles = blur. Speed Connectivity Every aspect of how organizations operate and change in real time. Everything is becoming electronically connected to everything else: products, people, companies, countries—everything. Chapter 1 Intangibles Blur Learning about Organizational Behavior 25 Every transaction has both tangible (e.g., monetary) and intangible (e.g., reputational) value. The intangible is growing faster; it is the increasing role of personal services for many organizations and the economy as a whole. The new world in which we will come to live and work.44 The revolution in technologies is a driving force in creating the state of blur and the need to actively manage change. Throughout this book, we discuss topics from the human side of the organization that are related to the introduction and use of technology and which, in turn, are affected by it. The rapid rise in use of the Internet throughout the world is the most obvious expression of economies and businesses that focus on technology.45 The Internet seems to bring the entire world to a person’s desktop, laptop, or personal digital assistant instantaneously and to quickly address any query or curiosity. The everexpanding online World Wide Web is but the most recent indication of a trend during the past few decades that has brought businesses, customers, and others continually closer in real time. Technologies have shaped our expectations about acceptable time frames for communicating, performing tasks, and seeing results. Chapter Summary Leadership is the process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behaviors, and making hard decisions about human and other resources. Leadership includes the seven foundation competencies developed throughout this book and more. In contrast, management focuses on looking inward, improving the present, tight controls, directing, coordinating, efficiency, and the like. Both leaders and managers must accept three key functions to be effective: authority, responsibility, and accountability. 1. State the core differences Organizational behavior involves the dynamic interplay among employees, leaders, teams, and the organization itself. We introduced seven competencies in this chapter and suggested the dynamic interplay among these competencies. 2. Outline the framework The ethics competency includes the knowledge, skills, and abilities to incorporate values and principles that distinguish right from wrong when making decisions and choosing behaviors. Managers and employees often experience ethical dilemmas— situations in which a decision must be made that involves multiple values. 3. Describe the ethics The self competency includes the knowledge, skills, and abilities to assess a person’s own strengths and weaknesses; set and pursue professional and personal goals; balance work and personal life; and engage in new learning—including new or modified skills, behaviors, and attitudes. This competency is especially inherent to the individual. Mastering it requires a lifelong process of learning and career management. 4. Describe the self The diversity competency includes the knowledge, skills, and abilities to value unique individual and group characteristics, embrace such characteristics as sources of organizational strength, and appreciate the uniqueness of each individual and group. These characteristics can act as potential sources of organizational strength. The core components of this competency are related to a framework of six primary categories of diversity: age, race, ethnicity, gender, physical abilities and qualities, and sexual orientation. These types of diversity are important because they often reflect differences in perspectives, lifestyles, attitudes, values, and behaviors. How leaders and employees embrace and respond to diversity influences an organization’s effectiveness. 5. Describe the diversity between leadership and management. for learning about organizational behavior. competency and its contribution to effective performance. competency and its contribution to effective performance. competency and its contribution to effective performance. 26 Part 1 6. Describe the across cultures competency and its contribution to effective performance. 7. Describe the communication competency and its contribution to effective performance. Introduction and Ethical Foundations The across cultures competency includes the knowledge, skills, and abilities to recognize and embrace similarities and differences among nations and cultures and then approach key organizational and strategic issues with an open and curious mind. Individuals’ and groups’ perceptions, communication, decisions, and behaviors are influenced by their culture. Too often, one’s culture may influence the development of sweeping negative stereotypes about those from other cultures. The communication competency includes the knowledge, skills, and abilities to transmit, receive, and understand data, information, thoughts, and emotions—nonverbal, verbal, written, listening, electronic, and the like—for accurately transferring and exchanging information and emotions. Core components of this competency are describing, active listening, questioning, nonverbal communication, empathizing, verbal communication, and written communication. This competency is like the body’s circulatory system, nourishing and carrying information to other competencies to enhance individual, team, and organizational effectiveness. 8. Describe the teams competency and its contribution to effective performance. 9. Describe the change competency and its contribution to effective performance. The teams competency includes the knowledge, skills, and abilities to develop, support, and lead teams to achieve organizational goals. Recognition of the potential for individual and team differences is stressed. The change competency includes the knowledge, skills, and abilities to recognize and implement needed adaptations or entirely new transformations. New technologies are one of the primary sources of change, which creates a state of blur. The Internet is a primary enabler of increasing organizational effectiveness and efficiency. Key Terms and Concepts Across cultures competency, 17 Active listening, 20 Career, 13 Career development, 14 Career plan, 14 Change competency, 23 Communication competency, 19 Competency, 8 Cultural values, 17 Culture, 17 Describing skill, 19 Diversity competency, 14 Empathizing skill, 20 Ethical dilemma, 10 Ethics, 10 Ethics competency, 10 Global mind-set, 18 Leader, 4 Leadership, 4 Manager, 5 Nonverbal communication, 20 Organizational behavior, 4 Questioning skill, 20 Self competency, 12 Teams competency, 21 Verbal communication, 20 Written communication, 20 Discussion Questions 1. In the Learning from Experience feature, Indra Nooyi states: “Performance with Purpose rests on three pillars: human sustainability, environmental sustainability, and talent sustainability.” Go to the PepsiCo website at www.pepsico.com. Click on “Company” and choose “PepsiCo Values and Philosophy.” Which attributes of the ethics competency are illustrated in PepsiCo’s statement of “Guiding Principles”? 2. 3. Review the Ethics Competency feature entitled “Robert A. Eckert, Chairman and CEO, Mattel, Inc.” Which attributes of the ethics competency are illustrated in this feature? Review the Diversity Competency feature on “Aetna’s Diverse Discoveries Program.” Which attributes of the diversity competency are illustrated in this feature? Chapter 1 4. 5. 6. Review the Self Competency feature on “Indra Nooyi’s Development Journey.” Which attributes of the self competency are illustrated in this feature? Review the Across Cultures Competency feature on “Carlos Ghosn, CEO, Nissan-Renault.” Which attributes of the across cultures competency are illustrated in this feature? Review the Communication Competency feature on “Maureen Chiquet, Global CEO, Chanel S.A.” In addition to active listening, what other attributes of the Learning about Organizational Behavior 7. 8. 9. 27 communication competency appear to be illustrated in this feature? Review the Teams Competency feature on “Grant Reid, President, Mars Drinks.” Which attributes of the teams competency are illustrated in this feature? Review the Change Competency feature on “Indra Nooyi Leads Change at PepsiCo.” Which attributes of the change competency are illustrated in this feature? What aspect of your life or role that you play reflects some or all of the variables that go into creating the state of blur? Explain. Experiential Exercise and Case Experiential Exercise: Self Competency Key Competencies Self-Assessment Inventory Instructions The statements in this inventory describe specific knowledge/ skills/abilities that are needed to be an effective leader or professional. This inventory focuses on the individual rather than teams or the organization as a whole with respect to the key competencies developed in this book. For each specific knowledge/skill/ability statement, you are to assess yourself on a scale from 1 to 10, according to the descriptive statements provided on the scale shown here. 10 9 8 7 6 5 4 3 2 1 I am outstanding on this knowledge/skill/ability. I am very good on this knowledge/skill/ability. I am good on this knowledge/skill/ability. I am average on this knowledge/skill/ability. I am barely adequate on this knowledge/skill/ability. I am lacking on this knowledge/skill/ability. I am weak on this knowledge/skill/ability. I am very weak on this knowledge/skill/ability. I have little relevant experience on this knowledge/skill/ ability, but the experiences I have had are poor. I have no relevant experience. I have not yet begun to develop this knowledge/skill/ability. _____ 6. _____ 7. _____ 8. _____ 9. _____ 10. _____ 11. _____ 12. _____ 13. _____ 14. _____ 15. _____ 16. _____ 17. _____ 18. _____ 19. _____ 20. _____ 21. _____ 22. Fill in the blank next to each listed specific knowledge/ skill/ability with a number from the preceding scale that you think is most descriptive of yourself. It is important that you choose a number that is most descriptive of what you are actually like rather than what you would prefer to be like or how you would like others to see you. Statements of Knowledge/Skills/Abilities _____ 1. Maintains an awareness of own behavior and how it affects others. _____ 2. Is able to set priorities and manage time. _____ 3. Knows own limitations and asks for help when necessary. _____ 4. Assesses and establishes own life- and workrelated goals. _____ 5. Takes responsibility for decisions and managing self. _____ 23. _____ 24. _____ 25. _____ 26. _____ 27. _____ 28. _____ 29. _____ 30. Perseveres in the face of obstacles or criticism. Is not self-promoting or arrogant. Recovers quickly from failure, including learning from mistakes. Tries to learn continuously. Pursues feedback openly and nondefensively. Organizes and presents ideas effectively. Detects and understands others’ values, motives, and emotions. Presents written materials clearly and concisely. Listens actively and nonjudgmentally. Responds appropriately to positive and negative feedback. Is aware of and sensitive to nonverbal messages. Holds people’s attention when communicating. Shares information willingly. Expresses own needs, opinions, and preferences without offending others. Uses a variety of computer-based (electronic) resources to communicate. Encourages the inclusion of those who are different from self. Seeks to learn from those with different characteristics and perspectives. Embraces and demonstrates respect for people of other cultures and races. Shows sensitivity to the needs and concerns of others. Seeks positive win–win or appropriate compromise solutions to conflicts based on diversity issues. Embraces unique individual and group characteristics as potential sources of organizational strength. Is sensitive to differences among people and seeks ways to work with them. Respects the ideas, values, and traditions of others. Identifies opportunities to promote diversity. Invests personal effort in helping people with attributes different from self to succeed. 28 Part 1 Introduction and Ethical Foundations _____ 31. Demonstrates dignity and respect for others in working relationships. _____ 32. Is honest and open in communication, limited only by privacy, legal, and competitive considerations. _____ 33. Assesses the right or wrong in own decisions and behaviors. _____ 34. Adheres to professional and organizational codes of conduct. _____ 35. Resists pressures from others to engage in unethical conduct. _____ 36. Understands ethical principles and rules. _____ 37. Is seen by others as a person of integrity. _____ 38. Sets clear expectations of ethical behavior and regularly reinforces this expectation with others. _____ 39. Is sensitive to the rights of others. _____ 40. Takes responsibility for own decisions and actions—doesn’t place blame on others to escape responsibility. _____ 41. Seeks to understand and appreciate the characteristics that make a particular culture unique. _____ 42. Treats people from different cultures with respect. _____ 43. Considers managerial and other issues from a worldwide perspective, that is, the ability to think globally, act locally. _____ 44. Works effectively with members from different cultures. _____ 45. Likes to experience different cultures. _____ 46. Learns from those with different cultural backgrounds. _____ 47. Knows which cultures have the expectation that individuals are to take care of themselves. _____ 48. Possesses firsthand knowledge that different cultures are risk adverse and use rules to minimize trying to deal with uncertainty. _____ 49. Knows how masculinity and femininity in different societies affect interpersonal relationships. _____ 50. Works effectively with people from different cultures who value unequal distribution of power in society. _____ 51. Works effectively in team situations. _____ 52. Encourages teams to celebrate accomplishments. _____ 53. Demonstrates mutual and personal responsibility for achieving team goals. _____ 54. Observes dynamics when working with groups and raises relevant issues for discussion. _____ 55. Promotes teamwork among groups, discourages “we versus they” thinking. _____ 56. Supports and praises others for reaching goals and accomplishing tasks. _____ 57. Encourages and supports creativity in teams. _____ 58. Shares credit with others. _____ 59. Motivates team members to work toward common goals. _____ 60. Is able to use groupware and related information technologies to achieve team goals. _____ 61. Demonstrates the leadership skills to implement planned change. _____ 62. Understands how to diagnose pressures for and resistances to change. _____ 63. Prepares people to manage change. _____ 64. Learns, shares, and applies new knowledge to improve a team, department, or whole organization. _____ 65. Knows how to diagnose a firm’s culture. _____ 66. Uses a variety of technologies to achieve successful change. _____ 67. Understands how various organizational designs can be used to bring about successful organizational change. _____ 68. Possesses a positive attitude toward considering changes and new ideas. _____ 69. Is able to negotiate and resolve conflicts that are often part of any significant change. _____ 70. Understands how organizational cultures influence organizational change. Scoring and Interpretation The Key Competencies Self-Assessment Inventory seeks your selfperceptions on characteristics and dimensions that are representative of seven key competencies. Total your responses for each competency as instructed. The sum of your responses is your score. The maximum score is 100 points for each competency. Self Competency: Includes the knowledge, skills, and abilities to assess your own strengths and weaknesses; set and pursue professional and personal goals; balance work and personal life; and engage in new learning—including new or changed skills, behaviors, and attitudes. • Add your responses for items 1 through 10 = _____, which is your self-assessment on the self competency. Communication Competency: Includes the knowledge, skills, and abilities to use all of the modes of transmitting, understanding, and receiving ideas, thoughts, and feelings—verbal, listening, nonverbal, written, electronic, and the like—for accurately transferring and exchanging information and emotions. • Add your responses for items 11 through 20 = _____, which is your self-assessment on the communication competency. Diversity Competency: Includes the knowledge, skills, and abilities to value unique individual, group, and organizational characteristics, embrace such characteristics as potential sources of strength, and appreciate the uniqueness of each. • Add your responses for items 21 through 30 = _____, which is your self-assessment on the diversity competency. Ethics Competency: Includes the knowledge, skills, and abilities to incorporate values and principles that distinguish right from wrong when making decisions and choosing behaviors. • Add your responses for items 31 through 40 = _____, which is your self-assessment on the ethics competency. Chapter 1 Across Cultures Competency: Includes the knowledge, skills, and abilities to recognize and embrace similarities and differences among nations and cultures and then approach key issues with an open and curious mind. • Add your responses for items 41 through 50 = _____, which is your self-assessment on the across cultures competency. Teams Competency: Includes the knowledge, skills, and abilities to develop, support and lead groups to achieve goals. • Add your responses for 51 through 60 = _____, which is your self-assessment on the teams competency. Change Competency: Includes the knowledge, skills, and abilities to recognize and implement needed adaptations or entirely new transformations in the people, tasks, strategies, structures, or technologies. • Add your responses for items 61 through 70 = _____, which is your self-assessment on the change competency. Your Overall Profile and Comparisons Determine your overall profile of competencies by using the summary (total) score for each competency. Compare and contrast your scores with those of two sample populations: (1) experienced managers and professionals (shown in the table below) and (2) undergraduate students at colleges and universities (shown in the table to the right). Mean scores and standard deviations are based on a sample of more than 300 individuals. One standard deviation from the mean covers 68 percent of the sample population; that is, if your score falls within one standard deviation of the mean score of either the managerial or the student sample, your score is similar to the scores of 68 percent of the students. Managerial Sample Population Competency Mean One Standard Deviation From Mean Self Communication Diversity Ethics Across Cultures Teams Change 78 75 75 84 72 77 69 9 9 11 9 14 12 14 Numerical Range for 68% of Population (High and Low) 87–69 84–66 87–63 93–75 86–58 89–65 83–52 Learning about Organizational Behavior 29 Student Sample Population Competency Mean One Standard Deviation from Mean Self Communication Diversity Ethics Across Cultures Teams Change 77 74 75 83 66 79 67 8 9 12 8 16 11 16 Numerical Range for 68% of Population (High and Low) 85–69 84–65 88–63 91–75 84–50 90–68 84–52 Overall Interpretations Scores 20–39 40–59 60–74 75–89 90–100 Meaning You see yourself as having little relevant experience and are deficient on this competency. You see yourself as generally lacking on this competency but may be satisfactory or better on a few of its knowledge/skill/ability components. You see yourself as average on this competency—probably below average on some of its knowledge/skill/ability components. You see yourself as generally above average on this competency and very good on a number of its knowledge/skill/ability components. You see yourself as generally outstanding on this competency. Questions 1. What does your overall profile suggest in relation to your needs for personal and professional development? 2. Based on the competency most in need of development, identify three possible actions that you might take to reduce the gap between your current and desired level for that competency. 3. Would others who work with you closely or know you well agree with your self-assessment profile? In what dimensions might their assessments of you be similar to your own? Why? In what dimensions might they differ? Why? Case: Diversity Competency Accenture’s Work–Life Balance Programs46 Accenture is a global management consulting, technology services, and outsourcing company. It has over 186,000 employees with offices and operations in 200 cities within 52 countries. Accenture is headquartered in New York City. Time and Flexibility Internal surveys at Accenture revealed that time is highly valued among employees—regardless of age—as are daily and career flexibility. Eighty-one percent of the employees 30 Part 1 Introduction and Ethical Foundations reported that their job satisfaction would increase significantly with additional time and location flexibility. Eightythree percent said the ability to balance work and life impacts their commitment to stay with Accenture. Sixty-one percent indicated that sabbaticals (career flexibility) are one of the top five most-favored resources. Equally between genders, 32 percent have turned down a new position in the past several years or considered leaving because of work– life balance concerns. Seventy-one percent said wellness is a priority. Work–Life Initiative at Accenture As a result of these findings and other considerations, Accenture developed two dozen work–life initiatives to give employees more time and flexibility. They range from flexible work arrangements to programs such as Back-Up Dependent Care and Lifeworks. In-home or center-based care is available for any dependent when regular care arrangements break down. Lifeworks is a free and confidential resource that provides information on a broad range of topics—from online health coaching to ergonomics assessments. This initiative also provides access to experts in many areas, including legal and financial. Future Leave is among the most successful new programs at Accenture. It provides Gen X (born 1965–1981) and Gen Y (born 1982–2000) employees and baby boomers alike the flexibility to address the personal and family issues they face at their particular stage of life while preserving promising or well-established careers. This initiative makes it possible for employees to take a self-funded sabbatical lasting from one to three months to teach English in another country, trek through Alaska, or meet family commitments. Any activity that employees believe will enrich their lives, their families, or their communities is eligible for approval. Employees may take Future Leave after every three years of work. It offers participants the option of planning ahead and putting aside savings in a special account at Accenture to fund a future leave. On average, 50 employees each quarter are away from their jobs on such sabbaticals. This number is expected to increase in the future. Chris Tserng Chris Tserng, the Human Resources Demand Lead for Accenture’s insurance practice in North America, supervises a staff of four in the Cincinnati, Ohio, office. This office supports executives when they work at client sites across the country. Ten years into her career at Accenture and eight months pregnant with her first child, Tserng earned a promotion. As planned, she took eight weeks of maternity leave and four weeks of accrued vacation time. Tserng states: “I didn’t know how hard it would be to leave my baby, Nicholas. I was feeling guilty and nervous. The guilt was compounded when I learned that the sitter I’d lined up had a change in plans. I didn’t know what to do or where to turn for child care. I began to think that my only option was to consider leaving the company, the job, and the colleagues I loved.” Future Leave was the answer for Tserng, making it possible for her to add one additional month to her maternity leave and paid time-off. During that extra time away, she and her husband located an appropriate day-care facility for Nicholas. Tserng adds: “It’s the best thing I ever did for my family. It was only 30 days, but it gave me the time to make important decisions about Nicholas and about my own future.” At the end of her leave, Tserng said her colleagues welcomed her back with open arms. She adds, “A lot of our executives, the men especially, recognize that once women become mothers, they do feel guilty about leaving their child and some decide not to return to work.” To learn more about Accenture, go to www.accenture .com. Questions 1. Which key attributes of the diversity competency are illustrated in this case? Give a specific example of each attribute identified. 2. Which key attributes of the self competency are illustrated by Chris Tserng in this case? Give a specific example of each attribute identified. 3. Which key attributes of the change competency are illustrated in this case? Give a specific example of each attribute identified. chapter 2 Individual and Organizational Ethics Learning Goals After studying this chapter, you should be able to: 1 Describe the stages of moral and ethical development. 2 Explain and apply the core concepts used by individuals and organizations to make ethical decisions. 3 Describe some ethics-based initiatives for fostering diversity in organizations. 4 Explain the nature of stakeholder responsibility and its ethical basis. Learning Content Learning from Experience Anne Mulcahy, Chairman and Former CEO of Xerox, Commits to Business Ethics Individual Differences and Ethics Ethics Competency Anne Mulcahy’s Ethical Leadership Decision Making and Ethics Change Competency James McNerney, CEO of Boeing Diversity and Ethics Diversity Competency Verizon’s Workplace Diversity Stakeholder Responsibility and Ethics Ethics Competency Johnson & Johnson’s Stakeholder Ethics and Principles Experiential Exercise and Case Experiential Exercise: Ethics Competency What Is Your Decision? Case: Diversity Competency Consensual Relationship Agreements Learning from Experience Anne Mulcahy, Chairman and Former CEO of Xerox, Commits to Business Ethics To learn more about Xerox, go to www.xerox.com. © PERSONS NAME/STOCK COMPANY the chief financial officer, was barred for life from serving as an officer or director of any corporation; Allaire was barred for five years; Thoman for three years. Mulcahy believes in transparency and on October 3, 2000, she candidly told analysts, “Xerox’s business model is unsustainable.” She was thanked for her honesty by a stock sell-off. Rumors of bankruptcy STEFAN ZAKLIN/GETTY IMAGES Anne M. Mulcahy is the chairman and former CEO of the Xerox Corporation, headquartered in Norwalk, Connecticut. Xerox is best known for its copiers, but it also makes printers, scanners, and fax machines. The company sells document software and copier supplies and also provides consulting and document outsourcing. In this feature and throughout the chapter, we present a number of aspects of Anne Mulcahy’s personal commitment to ethics and Xerox’s initiatives for nurturing an ethically based organization. When Mulcahy was appointed the CEO in 2001, it was not the best time to be the company’s leader. On May 11, 2000, Xerox fired CEO Richard Thoman (later charged with, but not convicted of, accounting fraud), and promoted Mulcahy to chief operating officer (COO). Acting CEO Paul Allaire (also later charged with, but not convicted of, accounting fraud) made it clear that Mulcahy was running the show. At the time, the company was $18 billion in debt and its stock price tanked. In their settlements with the U.S. Securities and Exchange Commission, Barry Romeril, and takeovers flourished. Things got worse. In January 2001, word got out that an assistant treasurer had been fired six months earlier for reporting to his superiors that accounting irregularities were widespread. This contradicted management’s earlier claims that the problems were confined to its Mexican operations. Four months later, Xerox announced it was restating three years of financials. In late July 2001, the Xerox board offered Mulcahy the top job. “I had never been on the board,” Mulcahy remembered. “I didn’t even know the board.” She had, however, been viewed favorably by outsiders, even as her peers were being pilloried for their governance failures. “I went about preparing myself with a vengeance,” Mulcahy said. Mulcahy has since ensured that Xerox’s ethics and governance practices and policies are 34 Part 1 Introduction and Ethical Foundations among the best in business today. Business Ethics magazine, the Ethisphere Institute, and others consider Xerox among the world’s most ethical companies. Recently, Mulcahy was selected as Chief Executive of the Year by Chief Executive magazine. She is the first woman CEO to be chosen by her peers for this honor. It is based on multiple criteria and competencies. Mulcahy decided to resign as CEO in July 2009 and continues as chairman.1 Ethical concepts and issues are being increasingly recognized as vital components of decision making in leading organizations, such as Xerox and Johnson & Johnson. In the Learning from Experience feature, Anne Mulcahy provides a glimpse into her efforts to instill and shape an ethical environment. It is the obligation of every organization’s top leaders to model and champion the core values and ethical principles that employees should use to guide their behaviors and decision making. The issues, concepts, and processes related to making ethical decisions are the focus of this chapter. First, we discuss the stages of moral and ethical development. Second, we discuss core concepts and principles that are fundamental to ethical decision making and behavior. Next, we describe some ethics-based initiatives for nurturing diversity in organizations. Then, we conclude with a discussion of several ethics-based initiatives for fostering stakeholder responsibility. Learning Goal 1. Describe the stages of moral and ethical development. Individual Differences and Ethics Because of the importance of ethics in organizations, we recognize it throughout this book in the Ethics Competency features.2 As discussed in Chapter 1, the ethics competency involves the knowledge, skills, and abilities needed by individuals, teams, and organizations to incorporate values and principles that distinguish right from wrong when making decisions and choosing behaviors. We also noted in Chapter 1 that ethics are values and principles that help individuals distinguish right from wrong. In the broadest sense, ethics refers to the study of moral values, principles, and rules, including the determination of standards of conduct and obligations for individuals and organizations. Ethical issues in organizations are common and complex. In fact, ethical issues influence the decisions that employees make daily. Some ethical issues involve factors that blur individual perceptions between “right” and “wrong.” As a result, some employees may differ in their opinions about what is ethical or unethical in various situations.3 Stages of Moral Development Lawrence Kohlberg probably is the best known scholar in the field of the psychology of ethical decision making and behavior. Kohlberg’s model of moral development is useful for exploring questions about how members of an organization regard ethical dilemmas, including how they determine what is right or wrong in a particular situation.4 Kohlberg held that people develop morally, much as they do physically, from early childhood to adulthood. As they develop, their ethical criteria and patterns of moral reasoning go through stages, as suggested in Figure 2.1. Stages of moral development are stages through which individuals evolve, ranging from the lowest stage (obedience and punishment orientation) to the highest stage (universal ethical principles). Kohlberg didn’t assume that everyone progresses through all of the stages. For example, an adult criminal could be stuck in the first stage. Moreover, Kohlberg contended that what defines a person’s stage of moral development is not the specific ethical choice, but the person’s ethical reasoning used to justify that choice. For example, individuals may talk and think at a higher moral level, but may not always behave accordingly. Situational forces, such as threatening peer pressure or demands from higher management, may lead to behaviors that the person would not otherwise exhibit.5 Chapter 2 Individual and Organizational Ethics FIGURE 2 .1 Kohlberg’s Stages of Moral Development Universal Social Contract Law & Order Interpersonal Instrumental Obedience & Punishment Childhood through Adulthood An individual at the obedience and punishment stage does the right thing mainly to avoid punishment or to obtain approval. In other words, only the immediate consequences of an action determine whether it’s good or bad. An employee stuck at this stage might think that the only reason not to steal money from an employer is the certainty of getting caught and then fired or even arrested. Obviously, organizations don’t want employees who use such simple reasoning to guide their behavior when faced with ethical issues. An individual at the instrumental stage becomes aware that others also have needs and begins to defer to them to get what the individual wants. Proper behavior is what satisfies the person’s self-interest. At times, self-interest can be satisfied by making deals or exchanges with other people. An employee at this stage might be willing to defer to the needs of the employer to reduce absenteeism, but only if the employer gives something in return. An individual at the interpersonal stage considers appropriate behavior as that which pleases or is approved by friends or family. Proper behavior exhibits conformity to conventional expectations, often of the majority. At this stage, being seen as a “good person” with basically good motives is important. An employee at this stage might focus on the importance of being a loyal employee and colleague who is always friendly and who avoids or remains calm during conflict. For example, if a work absence creates conflicts or work overload for other employees, some individuals at this stage might be willing to reduce their absences even if that meant not using all of their allotted sick days. An individual at the law and order stage recognizes that ethical behavior consists of doing a person’s duty, showing respect for authority, and maintaining the social order for its own sake. Loyalty to the nation and its laws is paramount. The person sees other people as individuals and also as parts of the larger social system that gives them their roles and obligations. An employee at this stage might rigidly adhere to organizational rules and regulations and legitimate orders from superiors. The employee is likely to resist or criticize the efforts of coworkers or superiors to bend or break the rules. In some organizations, employees commonly take paid sick days even when they aren’t sick. Employees may even encourage each other to take all of their sick days. They view these leave days as something the organization owes them. However, the organization’s policy or union contract may state that sick days are allowed only for legitimate illnesses. In this situation, employees at the law and order stage might resist peer pressure to take a day off if they aren’t ill. They would view the organization’s rules or the union contract as overriding the pressures from their peers. At this stage 35 36 Part 1 Introduction and Ethical Foundations of moral reasoning, rules are considered to be necessary for the effective functioning of the entire organization, and they should be followed even when it requires some self-sacrifices or resisting pressures from peers. An individual at the social contract stage is aware that others hold a variety of conflicting personal views that go beyond the letter of the law. An individual at this stage understands that, although rules and laws may be agreed on and for the most part must be followed, they can be changed if necessary. Some absolute values, such as life and liberty, are held regardless of different individuals’ values or even majority opinion. “The greatest good for the greatest number” is a key characteristic at this stage. The individual at this stage recognizes that employees are expected to follow the rules but also accepts the idea of breaking the rules when those rules conflict with accepted social values. They accept the organization permitting employees to be absent for only a specified number of days. But if the employee believes that the absentee rules unduly restrict freedom, he or she might also feel justified in breaking the rule or working to make it less restrictive. Finally, an individual at the universal principles stage views appropriate conduct as determined by a person’s conscience, based on universal ethical principles. Kohlberg felt that universal principles are founded in justice, the public welfare, the equality of human rights, and respect for the dignity of individual human beings. In his model, people at the most advanced stage of ethical reasoning recognize these universal principles and act in accordance with them rather than rules or laws. Moral Intelligence The contributions of Kohlberg and others are the foundation for the development of the concept of moral intelligence, which has been advanced in the field of education, medicine, and more recently business. It partially overlaps with emotional intelligence (EQ), which is discussed in Chapter 3. Moral intelligence is the mental capacity to determine how universal human principles that cut across the globe should be applied to personal values, goals, and actions.6 The moral principles in moral intelligence include: • Integrity: acting consistently with principles, values, and belief; telling the truth; standing up for what is right; and keeping promises. • Responsibility: taking responsibility for personal choices; admitting mistakes and failures; embracing responsibility for serving others. • Compassion: actively caring about others. • Forgiveness: letting go of one’s own mistakes; and letting go of others’ mistakes.7 Our concept of the ethics competency includes these moral principles. The following provides more insights about Anne Mulcahy, the chairman of Xerox who was discussed in the chapter-opening feature, as a person who reflects moral intelligence and champions the ethics competency.8 Ethics competency Anne Mulcahy’s Ethical Leadership Each year, Anne Mulcahy distributes a letter to all Xerox employees on business ethics. It reflects her personal commitment to ethical principles and the expectations she has for all employees. The following paragraphs are excerpts from one of Mulcahy’s letters. Chapter 2 In our highly competitive environment, where the pressure to perform is intense and relentless, we must constantly strive to do more and do better. Results are important—vital, in fact—and the pressure to improve results will always be with us. But, equally important is the means we use to achieve results. We must conduct ourselves and our business dealings with the highest degree of ethical conduct. This means not only complying with laws, regulations and company policies, but also doing so in a way that reflects our core values. When it comes to business ethics, there is no choice and there can be no change in our position. Ethic issues are so serious that, in some instances, violations could result in serious legal penalties for Xerox Corporation and for the individual. Furthermore, violations of our ethics policy could damage the reputation of Xerox, as well as the individual. To make certain that we protect our reputation and ensure compliance with applicable laws, Individual and Organizational Ethics 37 regulations, company policies and values, every violation of the ethics policy will be treated severely by the management of this Corporation. We must have zero tolerance in this regard. We have a duty to assure that Xerox people understand their ethical obligations. For this reason, we have a written Xerox Code of Conduct, available to all employees in multiple languages, and we cascade a letter like this throughout the company every year. It is important to rededicate ourselves periodically to our unwavering commitment to ethical conduct. We are committed to an absolute standard of the highest ethical behavior and unquestionable integrity in our financial reporting and business activities. For a Xerox manager, regardless of the division or the location, compliance with our policies and code of conduct is a non-negotiable requirement. To learn more about Xerox, go to www.xerox.com. Decision Making and Ethics The Ethics Resource Center, headquartered in Washington, D.C., conducts ethical surveys of employees in the United States. In their most recent survey, more than half of the American employees surveyed observed at least one type of ethical misconduct a year in their workplace despite an increase in employees’ awareness of formal ethics programs. The importance of having an ethical culture in organizations cannot be underestimated. Employees in organizations with a weak ethical culture reported a much higher level of observing at least one type of misconduct (theft, lying, etc.) than employees in an organization with a strong ethical culture (52 percent compared to 4 percent, respectively). Employees in organizations with a weak ethical culture were much more likely to experience pressure to break rules than those in strong ethical culture organizations (18 percent compared to one-half of 1 percent). Culture had a stronger impact on the results reported by employees than an organization’s formal ethics and compliance programs. Patricia Harned, the president of the Ethics Resource Center, comments: “Creating a strong ethical environment should be a top priority of all companies. We know formal programs are critical and work well initially, but we must now focus greater attention on building the right culture in which ethics programs operate. This data shows, for example, that leaders needs to behave by example to set an ethical culture throughout the whole organization.”9 Anne Mulcahy and the other top executives at Xerox show their commitment to a strong ethical culture by using their own behavior as an example. In some situations, there are no simple rules for making ethical decisions. Our goal here is to help you develop your ethics competency. The five key components that comprise the basics of ethical decision making include ethical intensity, ethics-based principles, concern for affected individuals, benefits and costs, and determination of rights. As suggested in Figure 2.2, these basic components are interrelated and need to be considered as a whole in order to make ethical decisions and create an ethical culture. Learning Goal 2. Explain and apply the core concepts used by individuals and organizations to make ethical decisions. 38 Part 1 Introduction and Ethical Foundations FIGURE 2 .2 Basic Components for Making Ethical Decisions Ethics-Based Principles Determination of Rights Ethical Intensity Concern for Affected Individuals Benefits and Costs Ethical Intensity Ethical intensity is the degree of moral importance given to an issue. It is determined by the combined impact of six factors, which are shown in Figure 2.3 and described as follows10: • Magnitude of consequences is the harm or benefits accruing to individuals affected by a decision or behavior. An action that causes 1,000 people to suffer a particular injury has greater consequences than an action that causes 20 people to suffer the same injury. A decision that causes the death of a human being is of greater consequence than one that causes a sprained wrist. • Probability of effect is the likelihood that if a decision is implemented it will lead to the harm or benefit predicted. The production of an automobile that would be dangerous to occupants during normal driving has greater probability of harm than the production of a NASCAR race car that endangers the driver when curves are taken at high speed. The sale of a gun to a known armed robber has a greater probability of harm than the sale of a gun to a law-abiding hunter. • Social consensus is the amount of public agreement that a proposed decision is bad or good. Actively discriminating against minority job candidates is worse than FIGURE 2 . 3 Determinants of Ethical Intensity Magnitude of Consequences plus Probability of Effect plus Social Consensus plus plus Concentration of Effect plus Proximity plus Temporal Immediacy Chapter 2 • • • Individual and Organizational Ethics not actively seeking out minority job candidates. Bribing a customs official in the United States or Canada evokes greater public condemnation than bribing a customs official in a country (e.g., Nigeria or Chad) where such behavior is an accepted way of doing business. Managers and employees will have difficulty deciding what is and isn’t ethical if they aren’t guided by a reasonable amount of public agreement or if the organization’s ethical culture is weak. Temporal immediacy is the length of time that elapses between making a decision and when the consequences of that decision are known. A shorter length of time implies greater immediacy. Assume Merck releases a drug that causes 1 percent of the people who take it to have acute nervous reactions within one week. This has greater temporal immediacy than releasing a drug that will cause 1 percent of those who take it to develop nervous disorders after 25 years of use. A reduction in the retirement benefits of current retirees at GM, Ford, and Chrysler has greater temporal immediacy than a reduction in the future retirement benefits of employees who are currently 25 years of age. Proximity is the sense of closeness (social, cultural, psychological, or physical) that the decision maker has for victims or beneficiaries of the decision. Recently, Citigroup cut 53,000 jobs. This reduced its labor force to 300,000 employees with more layoffs anticipated. This action had a greater impact on the remaining employees than the personal impact the news reporters feel when announcing this layoff. Citigroup CEO Vikrim Pandit reflected this more personal impact when he addressed the job cuts at an employee town hall meeting. He stated: “There is nothing easy about these decisions and the impact on our people. We do this because we must and not because we want to.”11 Concentration of effect is the inverse function of the number of people affected by a decision. A change in an insurance policy denying coverage to 40 people with claims of $50,000 each has a more concentrated effect than a change denying coverage to 4,000 people with claims of $500 each. Cheating an individual or small group of individuals out of $10,000 has a more concentrated affect than cheating an organization, such as the IRS, out of the same sum. Insights for Individuals The six factors of ethical intensity are influenced by the characteristics of the decision itself. Ethical intensity rises with increases in one or more of its factors and declines with reductions in one or more of these factors, assuming that all other conditions remain constant. However, you may rate the ethical intensity of the same decision differently than another person because you place different values on the principles and rules of ethics in decision making. Table 2.1 provides a questionnaire for you to take in rating the ethical intensity of 10 different behaviors. Ethics-Based Principles There are no universally accepted principles and rules for resolving all ethical issues. In addition, individuals and groups differ over what influences ethical and unethical behaviors and decisions. Numerous principles and rules have been suggested to provide an ethical justification for a person’s decisions and behaviors.12 They range from those that justify self-serving decisions to those that require careful consideration of others’ rights and costs. In presenting all of these principles, we recognize that the individual generally cannot use a principle to justify an act or decision if it is illegal. Self-Serving Principles The following three ethical principles are used to justify self-serving decisions and behaviors. 39 40 Part 1 Introduction and Ethical Foundations TABLE 2 .1 Ethical Intensity of Selected Behaviors Instructions: Evaluate each of the 10 behaviors shown in this questionnaire in terms of its ethical intensity. The overall scale of ethical intensity varies from −5, which indicates highly unethical behavior, to +5, which indicates a highly acceptable and ethical behavior. Write down the number on each scale at or near the point that reflects your assessment. What factors were most important in arriving at your rating of the ethical intensity for each behavior? ETHICAL INTENSITY BEHAVIORS _____ _____ _____ _____ _____ _____ _____ 1. 2. 3. 4. 5. 6. 7. _____ 8. _____ 9. _____ 10. UNETHICAL/ NEGATIVE −5 NEUTRAL 0 ETHICAL/ POSITIVE +5 Covering up mistakes by coworkers. Giving a favor to a client out of friendship. Giving a favor to a client for a bribe. Discriminating against an employee on the basis of race. Presenting misleading information to a customer. Presenting only positive features of your organization’s products to a customer. Manipulating performance data and indicators to give the appearance of reaching your goals. Rewarding people differently based on differences in performance. Bending the rules to help the organization. Using an office PC for personal use. Hedonist principle: You do whatever is in your own self-interest. • Might-equals-right principle: You do whatever you are powerful enough to impose on others without respect to socially acceptable behaviors. • Organization interests principle: You act on the basis of what is good for the organization. Some of the statements that might reflect self-serving principles include the following: (1) “This act really won’t hurt anybody”; (2) “I don’t feel comfortable doing this, but if this is what it takes to get ahead (via money/work/promotion/prestige), I should probably do it”; (3) “Everybody else does it, so why shouldn’t I”; (4) “Because _____ is my boss and told me to do this, I have no choice but to comply”; and (5) “Since this is such a small matter to most people and it will help our organization, who will notice.” The large bonuses paid to or requested by top executives at some U.S. financial institutions with huge losses after the near collapse of the financial system and in the face of a deep recession appear to reflect the hedonist principle and might-equals-right principle. John Thain, the CEO of Merrill Lynch, initially proposed in early December 2008 to the board of directors that he receive a bonus of $10 million for 2008, despite huge losses and the need to sell the floundering firm to Bank of America to avoid bankruptcy. His argument: Things would have been worse if he had not orchestrated the sale of the firm. There were enormous losses for Merrill’s shareholders and major layoffs. Thain received a $15 million signing bonus when he joined Merrill in December 2007. The public and media hullabaloo that ensued when his bonus request hit the news presumably led him to withdraw his bonus proposal to the board on December 8, 2008. We suspect, but do not know, that Thain received a phone call from Kenneth Lewis, the CEO of Bank of America, to withdraw the bonus proposal. Lewis announced no bonuses for top executives at Bank of America in 2008. Three weeks later, Lewis fired Thain over the way he handled billions in losses at Merrill Lynch.13 • Balancing Interests Principles The following three ethical principles are used to justify decisions intended to balance the interests of multiple individuals or groups14: Chapter 2 Individual and Organizational Ethics Means–end principle: You act on the basis of whether some overall good justifies a moral transgression. Utilitarian principle: You act on the basis of whether the harm from the decision is • outweighed by the good in it—that is, the greatest good for the greatest number. • Professional standards principle: You act on the basis of whether the decision can be explained before a group of your peers. These principles provide the ethical foundation for some decisions in organizations. They create the basis for helping to resolve ethical dilemmas. For example, organizations—Citigroup, General Motors, and others—are able to justify employee layoffs for the good of the organization. However, they recognize certain responsibilities for providing career counseling and severance packages to the employees affected. The Internet, new surveillance technologies, privacy issues, and governmental legislation in the United States and many other countries have created major concerns in the attempt to balance the interests of individuals, organizations, and the public at large.15 The growing perception is that employees and consumers have lost too much of their privacy to employers, marketers, and governmental agencies. Although a variety of U.S. laws have been passed that attempt to protect the privacy of individuals in their roles as citizens, an employee’s legal right to privacy in the workplace is quite limited.16 Privacy issues in the workplace pose ethical dilemmas in terms of (1) distribution and use of employee data from computer-based human resource information systems; (2) increasing use of paper-and-pencil honesty tests, resulting from polygraph testing being declared illegal in most situations; (3) procedures and biases for substance abuse and acquired immune deficiency syndrome (AIDS) testing; and (4) genetic testing. The ethical dilemmas in each of these areas revolve around balancing the rights of the individual, the needs and rights of the employer, and the interests of the community at large.17 Most employers want to ensure a reasonable degree of employee privacy even when they are not legally obligated to do so. This perspective is based on the balancing interests ethical principles. There is, however, wide consensus that employers must protect against the actions of employees who download pornography or copyrighted music, send harassing e-mail, reveal company secrets, disclose personal information, sell drugs, or spend too much time surfing the Internet for personal use. New technologies make it possible for employers to monitor many aspects of their employees’ jobs, especially on telephones, computer terminals, through electronic and voice mail, and when employees are using the Internet. Monitoring of employees by employers is virtually unregulated by the U.S. government. Therefore, unless company policy specifically states otherwise (and even this is not assured), there are no legal prohibitions against an employer listening, watching, and reading almost all workplace communications by employees.18 41 WALTER G ALLGÖWER/PHOTOLIBRARY • Concern-for-Others Principles The following three ethical principles focus on the need to consider decisions and behaviors from the perspective of those affected and the public as a whole: • Disclosure principle: You act on the basis of how the general public would likely respond to the disclosure of the rationale and facts related to the decision. • Distributive justice principle: You act on the basis of treating an individual or group equitably rather than on arbitrarily defined characteristics (e.g., gender, race, age). • Golden rule principle: You act on the basis of placing yourself in the position of someone affected by the decision and try to determine how that person would feel. ▲ New surveillance technologies have created concerns in the attempt to balance the interests of individuals, organizations, and the public at large. 42 Part 1 Introduction and Ethical Foundations These three ethical principles are often imposed on certain categories of decisions through laws, regulations, and court rulings. Governments impose ethical principles and rules that organizations are expected to follow. For example, U.S. civil rights laws forbid organizations from considering personal characteristics—such as race, gender, religion, or national origin—in decisions to recruit, hire, promote, or fire employees. These laws are based on the ethical principle of distributive justice, which requires the same (or substantially the same) treatment of individuals regardless of age, disability, race, national Ethics Insight origin, religion, and sex. The U.S. Equal Pay Act of 1963 asserts that paying women and men different wages is illegal when Our system of capitalism is built on investheir jobs in the same organization require substantially equal tor trust—trust that corporate leaders and skills, effort, and responsibility and are performed under similar boards of directors will be good stewards working conditions. This act applies to organizations with 15 of their investments and provide investors or more employees. There are limited exceptions for pay difwith a fair return. There is no doubt that ferentials when an employer can show that some leaders of corporations have violated that trust. • the difference is due to a seniority or merit system or William George, Former Chairman and CEO, Medtronic, and Author, True North: Discover Your Authentic Leadership the difference is due to an employee’s education, training, and experience.19 The scenario in Table 2.2 lets you choose a course of action based on the nine ethical principles just described. If you were Ray, what would you do? • TABLE 2 .2 Ethical Assessment of a Scenario Scenario Ray manages a unit in a company that calls itself a "total quality" organization. Part of the organization's mission statement says that employees should strive to continually improve their performance. Lately, Ray's unit has been extremely busy trying to get its work done on several important projects. Ray asked his vice president for advice about how to meet all of the deadlines, and the VP basically told him that his unit would have to cut corners on quality in order to get everything done on time. The VP also told Ray that meeting deadlines is the best way to keep clients off their backs, and that the clients rarely complain about substandard work because its effects show up much later. However, Ray knows that doing substandard work for clients will only hurt the company's reputation in the long run. Questions 1. What should Ray do? 2. How would you evaluate the ethics of your decision with respect to the degree to which it is based on each of the following ethical principles? Ethical Principle UNCERTAIN/ UNDECIDED HIGH DEGREE 5 4 3 LOW DEGREE (NONE) 2 1 To what degree is your decision based on this ethical principle: 1. 2. 3. 4. 5. 6. 7. 8. 9. Hedonist Might-equals-right Organization interests Means-end Utilitarian Professional standards Disclosure Distributive justice Golden rule 5 5 5 5 5 5 5 5 5 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 Source: Scenario adapted from Loviscky, G. E., Treviño, L. K., and Jacobs, R. R. Assessing managers’ ethical decisionmaking: An objective measure of managerial moral judgment. Journal of Business Ethics, 2007, 73, 263–285. Chapter 2 Individual and Organizational Ethics Insights for Leaders As noted previously, no single factor influences the degree to which decisions and behaviors are likely to be ethical or unethical. However, the following actions can help integrate ethical decision making into the day-to-day culture of an organization20: • Leaders must demonstrate their commitment to ethical behaviors and decisions made by other managers and employees. Recall Anne Mulcahy’s commitments to ethics in the opening feature and her annual letter to all employees in the Ethics Competency feature. Elsewhere, she has stated, “We all believe we are part of an ongoing experiment to demonstrate that business success and business ethics are not mutually exclusive.”21 • A clear code of ethics should be promulgated and followed. Xerox has a clear and well-stated code of ethics titled Code of Conduct: A Handbook for Xerox People. On the opening page to this document, Anne Mulcahy states, in part: “This handbook is one of the most important documents you will ever read at Xerox. It summarizes and synthesizes all of our policies relating to business ethics. It’s a document I hope you will read and internalize. Even more important, I hope you will keep it and refer to it whenever the slightest question arises as to what is and isn’t ethical behavior.”22 If truly part of the organization’s ethical culture, a code of ethics can clarify for all parties, internal and external, the principles and standards that govern its conduct. This helps convey its commitment to responsible practice wherever it operates. Codes of ethics may serve a variety of other practical purposes. They can help employees from diverse backgrounds work more effectively across geographic and cultural boundaries. Recall Mulcahy’s statement in her letter to all employees: “For a Xerox manager, regardless of division or the location, compliance with our policies and code of conduct is a non-negotiable requirement.” A code may serve as a reference point for decision making. A code enables organizations to respond quickly and uniformly to a crisis. It may even aid in recruitment by helping to attract individuals who want to work for an organization that advocates world-class principles and standards. A code that is enforced can also help an organization manage risk by reducing the likelihood of employee misconduct. A whistle-blowing policy to forbid retaliation against those who report wrong• doing or other ethical procedures should be established and followed. Xerox addresses this in a variety of ways. Patricia Nazemetz, the chief ethics officer at Xerox, sets forth on the firm’s website (www.xerox.com) the nine components of the Xerox Ethics and Compliance Program. • Managers and employees alike should be involved in the identification of ethical problems and efforts to solve them. Xerox does this extensively by providing annual ethics training, an annual ethics certification process, and an Ethics Helpline. • The performance appraisal process should include consideration of ethical issues. Xerox does this, as suggested in the chapter-opening feature. • The organizational priorities and efforts related to ethical issues should be widely publicized. Xerox does this in a variety of ways, for example, with the annual ethics letter discussed earlier that is sent to all employees. Concern for Affected Individuals The highest form of ethical decision making involves a careful determination of who will receive benefits or incur costs as a consequence of a decision. For major decisions, this assessment may include a variety of stakeholders—shareholders, customers, lenders, suppliers, employees, and governmental agencies, among others.23 The more specific an individual or group can be about who may benefit and who may incur costs from a particular decision, the more likely it is that ethical implications will be fully considered. 43 44 Part 1 Introduction and Ethical Foundations UN Global Compact Launched in 2000, the UN Global Compact is the largest “corporate citizenship” initiative in the world.24 This voluntary initiative includes more than 4,700 corporate participants from 130 countries as well as 700 civil societies, labor organizations, and academic institutions. This compact represents a partnership between the private sector and other sectors to promote responsible corporate citizenship as one means of encouraging business to be part of the solution to a more sustainable and inclusive global economy. The UN Global Compact works to advance 10 universal principles in the areas of human rights, labor standards, the environment, and anticorruption. For example, Principle 1 states: “Businesses should support and respect the protection of internationally proclaimed human rights.” The compact provides extensive information, specific guidelines, and suggestions for implementing this principle. The UN Global Compact is not a regulatory agency—it does not “police,” enforce, or measure the behavior or actions of companies. Rather, it relies on public accountability, transparency, and the enlightened self-interest of companies to initiate and share the actions they take in pursuing the principles on which the UN Global Compact is based. Employment at Will Employment at will is an employment relationship in which either party can terminate the employment relationship at will with no liability if there was not an express contract for a definite term governing the employment relationship.25 Although employment at will allows an employee to quit for no reason, it is also used when an employer wants to fire an employee at any time for any reason or no reason. At-will employment is a creation of U.S. law. All 50 states recognize retaliatory discharge as an exception to the at-will rule. Under the retaliatory discharge exception, an employer may not fire an employee if it would violate a state or federal statute. For example, an employee who reported illegal behavior by the organization to a government agency cannot be fired. Most states also recognize an implied contract as an exception to at-will employment. Implied employment contracts are most often found when an employer’s personnel policies or handbooks indicate that an employee will not be fired except for good cause. If the employer fires the employee in violation of an implied employment contract, the employer may be found liable for breach of contract. The employment-at-will doctrine increasingly has been challenged successfully in alleged wrongful termination cases in the courts. These challenges are based on the distributive justice principle and the golden rule principle. Before 1980, companies in the United States were free to fire most nonunion employees “at will.” Employees were fired for any reason without explanation and rarely went to court to challenge a termination. The vast majority who did had their suits dismissed. However, the courts have recently ruled in favor of exceptions to the employment-at-will doctrine, especially if questionable termination procedures were followed.26 Benefits and Costs An assessment of the ethical implications of the benefits and costs of a decision or issue requires a determination of the interests and values of those affected by the decision(s). Those affected might be the organization as a whole, all employees or specific groups of employees, customers, suppliers, a community, society as a whole, and other affected parties. Benefits refer to whatever a party considers desirable. Costs refer to whatever a party considers undesirable. Benefits and costs can refer to monetary or nonmonetary effects. A low-cost, coal-burning power plant (monetary effect) that produces high levels of pollution (nonmonetary effect) results in a benefit to the firm and a cost to the public. The rub comes in considering the implications of the benefits and costs of particular decisions through the interests and “eyes” of those affected. One party’s benefits in a Chapter 2 Individual and Organizational Ethics decision may create or be perceived to create costs for one or more other parties. A few of these potential tensions with ethical implications are briefly noted as follows: Greater profits for shareholders versus higher wages for employees. Within the United • States, the legally mandated minimum wage for workers was raised in 2008 with subsequent required increases in 2009. The concern-for-others ethical principles were presented as the rationale for the minimum wage that should be paid by U.S. employers, with a few exceptions. • Increased production of electrical energy with lower per unit costs versus the need for lower levels of pollution. Traditionally, electric utilities used the organization interests principle to suggest that if greater pollution would lower production costs and increase profits, it was justifiable. Today, an increasing number of energy companies (e.g., Duke Energy, TXU) are recognizing the need to proactively address pollution problems and not simply wait for government regulatory agencies and laws that require them to do so. This is consistent with the views expressed in the UN Global Compact. • Higher prices needed by suppliers to pay better wages, provide a safer work environment, and pollute less versus providing lower prices to consumers. The self-serving principles suggest that firms (e.g., Walmart, Nike, Dell) should seek to obtain products or services from suppliers at the lowest possible cost with the highest possible quality from any source in the world. • Survival of the business through layoffs and reduced compensation versus the desires of employees for greater job security and increased pay. Various combinations of ethical principles often come into play in such situations, including self-serving, balancing interests, and concern for others. Care must be taken to guard against assuming that all stakeholders attach the same importance or ethical principles to the costs versus benefits of particular decisions. Conflicting assessments can lead to different interpretations of ethical responsibilities. For example, Greenpeace and other environmental groups emphasize the benefits of “preservation of nature” and that the costs of doing so are well worth it. Steven Biel, the Greenpeace USA Global Warming Campaign Director, released a statement prior to the U.S. car manufacturers being given financial support by the U.S. government in 2008. He stated: “Should Congress bail out the auto companies, they should require Detroit to make real, significant changes in the way they do business, not just small tweaks around the edges, like cutting executive salaries and selling corporate jets. At a minimum, Congress should institute the following changes as a condition of any bailout: (1) Increase fuel economy standards to at least 50 mpg by 2028; (2) Put one million plug-in hybrids—cars that can get up to 150 miles per gallon—on the road by 2015; and (3) Establish a national standard for tailpipe global warming emissions modeled on the California clean cars program.”27 Insights for Leaders The utilitarian principle is commonly used by leaders to weigh the benefits and costs of organizational decisions. Utilitarianism emphasizes the greatest good for the greatest number in judging the ethics of a decision. For example, a leader who is guided by utilitarianism considers the potential effect of alternative actions on affected employees. All else equal, the leader selects the alternative benefiting the greatest number of employees. The leader accepts the fact that this alternative may harm others. As long as potentially positive results outweigh potentially negative results, the leader considers the decision to be both good and ethical. According to some critics, such as Greenpeace, utilitarianism has been misused by business leaders in U.S. organizations. They suggest that there is too much short-run maximizing of personal advantage and too much discounting of the long-run costs of disregarding ethics. Those costs are claimed to include rapidly widening gaps in income between rich and poor, creation of a permanent underclass with its hopelessness, and harm done to the environment. These critics believe that too many people and institutions are 45 46 Part 1 Introduction and Ethical Foundations acquiring wealth for the purpose of personal consumption and power and that the end of acquiring wealth justifies any means of doing so. As a result, these critics suggest that trust of leaders and institutions, both public and private, has declined.28 Perhaps individuals such as Anne Mulcahy will help to increase trust in the ethics of business leaders and institutions. Also, greater transparency in decisions that affect others will enhance a sense of trust in the leadership of corporations. Of course, a reduction in fraudulent and unethical decision making by some businesspeople such as Bruce Marlow of AIG and Richard Fuld, Jr., of Lehman Brothers would help. They and others receive widespread publicity and shape the public’s general negative stereotype of top business leaders.29 Determination of Rights The notion of rights also is complex and continually changing. One dimension of rights focuses on who is entitled to benefit from or participate in decisions. If rights change, then the mix of benefits and costs changes. Union–management negotiations frequently involve conflicts and dilemmas over management’s rights to hire, promote, fire, and reassign union employees and to outsource work. Slavery, racism, gender, and age discrimination and invasion of privacy often have been challenged by appeals to values based on concepts of fundamental rights, especially in terms of the distributive justice and golden rule principles.30 Insights for Leaders Issues of responsibilities and rights in the workplace are numerous and vary greatly over time.31 A few examples include unfair and reverse discrimination, sexual harassment, employee rights to continued employment, employer rights to terminate employment “at will,” employee and corporate free speech, due process, the right to test for substance abuse and AIDS, and the right to privacy. Some experts believe that workplace rights and the establishment of trust with employees is a crucial internal issue facing organizations today. Procedural and Interactional Justice Procedural justice refers to the perceived fairness of the rules, guidelines, and processes for making decisions.32 As you recall, distributive justice focuses on treating an individual or group equitably rather than on arbitrarily defined characteristics (gender, race, age, and so on). We are mindful that culture may exert important and wide ranging effects on justice behaviors—distributive, procedural, and interactional—and often shapes individuals feelings of injustice or justice.33 The expectation is that fair procedures, such as a formal and well-developed appeals process, will result in more just decisions (e.g., distributive justice). For example, Xerox has well-developed procedures in place for employees to report fraudulent and harassing behaviors. It is now recognized that procedural justice needs to be accompanied by a sense of interactional justice. Interactional justice refers to the quality of interpersonal treatment individuals receive during the use of organizational procedures.34 A few examples of procedural and interactional justice include disciplinary appeals procedures; procedures for reporting ethical misconduct, such as Boeing’s Ethics Line; procedures for appealing dismissals or annual performance reviews; and sexual or racial harassment appeal procedures. Four criteria that typify the presence or absence of interactional justice include (1) respect (whether decision makers treat individuals politely), (2) propriety (whether decision makers are free of bias), (3) truthfulness (whether decision makers are engaged in deceptions), and (4) justification (whether decision makers adequately explain procedures to individuals).35 Individuals who have high moral intelligence are likely to find it natural to implement the interactional justice criteria when striving to implement both procedural justice and distributive justice in their leadership roles. Chapter 2 Individual and Organizational Ethics Leaders who use procedural and interactional justice believe that employees are going to be more motivated to perform at a high level when they perceive the procedures and their implementation as fair. In organizations, these two types of justice are very important to most employees. Reactions to pay raises, for example, are greatly affected by employees’ perceptions about procedural and interactional fairness issues. If in the minds of the employees the pay raises were administered fairly, the employees are usually more satisfied with their increases than if the employees judged the way the raises were made to be unfair. The perceived fairness of how pay raises were allocated is a better predictor of satisfaction than the absolute amount of pay received. In both the pay and performance evaluation situations, the individual can’t directly control the decision but can react to the procedures used to make it. Even when a particular decision has negative outcomes for the individual, procedural and interactional fairness can help ensure that individuals will feel their interests are being protected. Procedural and interactional justice have also been found to affect the attitudes of workers who survive a layoff. When workers are laid off, survivors are often in a good position to judge the fairness of the layoff in terms of how it was handled. When a layoff is handled fairly, survivors feel more committed to the organization than when they believe that the laid-off workers were treated unfairly. A number of best practices have been identified for implementation in performance reviews that are intended to achieve both procedural and interactional justice. In brief, five of them are as follows36: • Managers should be given specific and clear instructions on procedures. • Managers should be trained in how to administer the review. • Results should be discussed with employees. • Employee participation should be allowed in the review process (e.g., setting goals, providing input on performance). • The review should be developmental (e.g., indicate how to improve). The following Change Competency feature focuses on the leadership of James McNerney, CEO of Boeing. It reports on some of the ways that he has led the changes to restore and reinforce the firm’s ethical culture. His selection as CEO followed the public revelations of a series of unethical and illegal actions by a few of Boeing’s key leaders and others.37 Prior to becoming CEO, McNerney was the chairman and CEO of 3M and had served on the board of directors of Boeing, among other organizations. Boeing is a major aerospace company, maker of commercial jets, and defense contractor. This firm is headquartered in Chicago, Illinois, and has approximately 160,000 employees with major operations in the Seattle, Washington, region.38 Change competency James McNerney, CEO of Boeing The following are excerpts of comments by James McNerney. A few years ago, Boeing was stunned to find itself among the companies that made headlines for some very high-profile ethical lapses. Several external reviews found that Boeing’s ethical breaches were not part of a systemic problem. But the reviews found that weaknesses within the corporation’s culture permitted some employees to look the other way. Too many people who thought something “didn’t feel right” failed to raise a red flag for a variety of reasons. They wanted to 47 Part 1 Introduction and Ethical Foundations • M. SPENCER GREEN/AP PHOTO 48 James McNerney, CEO of Boeing. • win a contract, they feared retaliation, they just didn’t want to rock the boat, or they lacked the courage to speak up in a command-andcontrol culture. Companies doing business with the U.S. government are expected to adhere to the highest legal and ethical standards. I acknowledge that Boeing did not live up to those expectations in the cases addressed by the settlement we’re discussing here today. We take full responsibility for the wrongful acts of the former employees who brought dishonor on a great company and caused harm to the U.S. government and its taxpayers. Boeing is accountable for what occurred. And we have cooperated with the government throughout this process. To strengthen the ethics of our culture, we are changing in a number of ways, several of which follow: • We are getting committed and getting aligned. For example, every employee, each year, personally recommits to ethical and To learn more about Boeing, go to www.boeing.com. • compliant behavior three ways: by going through a thorough training regimen; re-signing the Boeing Code of Conduct; and participating in one of our Ethics Recommitment stand-downs with his or her business or function. Boeing established a new organization—the Office of Internal Governance (OIG)—which reports directly to me and has regular, and routine, visibility with our board of directors. OIG’s role includes: (1) Acting as a strong check and balance for key functional disciplines. An example would be monitoring and tracking such things as potential conflicts of interest throughout hiring, transfer and proposal processes. (2) Providing significantly greater visibility into—and oversight of—specific ethics and compliance concerns and cases for our top leaders. (3) Consolidating, in one organization, our various investigative, audit and oversight resources. This way, we were able to identify potential problems and take corrective actions earlier. We are opening up the culture. And this is critical. We are creating a work environment that encourages people to talk about the tough issues and to make the right decisions when they find themselves at the crossroads between meeting a tough business commitment and doing the right thing. There simply can be no trade-offs between Boeing’s values and Boeing’s performance. We want people to know that it’s OK to question what happens around them, because that’s what surfaces problems early. Silence that ignores the misconduct of fellow workers is not acceptable. We are driving ethics and compliance through our core leadership development model, not just off to the side of other things we do every day. At the end of the day, the character of an organization—its culture—comes down to the behavior of its leaders. I believe this is key: Ethics and compliance must be—and must be seen to be—a central part of the whole system of training and developing leaders, and of the whole process of evaluating, paying and promoting people. Chapter 2 Individual and Organizational Ethics Diversity and Ethics 49 Learning Goal 3. Describe some ethics-based The diversity competency must be accompanied by an ethical foundation, as suginitiatives for fostering gested in Chapter 1, to be meaningful.39 Just as importantly, the diversity competency diversity in organizations. needs to reflect proactive efforts by organizations and leaders to nurture positive and constructive diversity that is difficult to achieve in the absence of an ethical culture.40 There are varied and conflicting points of view on diversity.41 Individual employees may view diversity initiatives as a threat, an opportunity, a blow for justice, harmless fluff, a learning opportunity, a ploy of the disenfranchised, a source of Diversity Insight discomfort, or a cultural learning experience.42 We’re focused on maintaining a culture In the following section, we address several domains that of diversity and inclusion, one that benare important to ethics and diversity. efits our shareholders and customers. It also allows us to tap into the creativity and vitality of our workforce and suppliDiversity and Ethical Cultures ers. . . . We recognize that diversity is about Cultural diversity in an organization is embedded in its everyone. So we’re creating an incluculture. sive culture where the talents of every employee are maximized and everyone Role of Organizational Culture feels respected and valued. Organizational culture reflects the shared and learned values, Magda N. Yrzarry, Vice President, Workplace beliefs, and attitudes of its members.43 In a sense, organizational Culture, Diversity and Compliance, Verizon culture is the personality of the organization—difficult to fully Communications, Inc. express in words. Yet, most employees in the organization sense it and know it because it guides their day-to-day behaviors and decisions. Organizational cultures may vary from having a weak ethical culture to a strong one. Recall the leadership initiatives of James McNerney, CEO of Boeing, in the Change Competency feature to strengthen the ethics of the organization’s culture. Organizational culture appears to affect ethical behavior and diversity in several ways. For example, a culture that emphasizes ethical norms provides support for ethical behavior. Top leadership plays a key role in fostering ethical behavior by exhibiting the correct behavior. A few of the organizations identified as having strong ethical cultures include Xerox, Canon, Medtronic, and the Mayo Clinic. Top leaders in these organizations nurture a culture that rewards ethical priorities and influences how employees behave. If lower level managers observe top-level leaders sexually harassing others, falsifying expense reports, diverting shipments to preferred customers, misrepresenting the organization’s financial position, and other forms of unethical behavior, they assume that these behaviors will be acceptable, ignored, or possibly rewarded. Thus, the presence or absence of ethical behavior in leaders’ actions both influences and reflects the culture. The organizational culture may promote taking responsibility for the consequences of actions, thereby increasing the probability that employees will behave ethically. Alternatively, the culture may diffuse responsibility for the consequences of unethical behavior, thereby making such behavior more likely.44 Increasing Diversity as Opportunity Organizations have become increasingly diverse in terms of gender, race, ethnicity, and nationality. More than half of the U.S. workforce consists of women, minorities, and recent immigrants. The growing diversity of employees in many organizations may bring substantial benefits, such as more successful marketing strategies for different types of customers, improved decision making, and greater creativity and innovation. The U.S. Department of Labor forecasts that 60 percent of all new employees entering the U.S. workforce during the period through 2010 will be women or people of color. 50 Part 1 Introduction and Ethical Foundations Anne Mulcahy, the chairman of Xerox, comments on diversity as an opportunity: Diversity is about more than race and gender. It’s about more than numbers. It’s about inclusion. Diversity means creating an environment where all employees can grow to their fullest potential. I’m convinced diversity is a key to success. Experience tells us that the most diverse companies—companies ruled by a hierarchy of imagination and filled with people of all ages, races, and backgrounds—are the most successful over time. Somehow, diversity breeds creativity. Maybe it’s because people with different backgrounds challenge each other’s underlying assumptions, freeing everybody from convention and orthodoxy. We provide a shining proof point that diversity in all its wonderful manifestations is good for business . . . good for our country . . . and good for people.45 Mulcahy’s remarks reflect several ethical principles: the organization interests principle, distributive justice principle, and golden rule principle. However, employee diversity does not automatically foster creativity, market share, or competitive advantage. Left unmanaged and with a weak ethical culture, increased employee diversity may well damage morale, increase turnover, and cause more communication problems and interpersonal conflict.46 Insights for Leaders There are no easy answers to the challenges of fostering a culturally diverse workforce. There are some common characteristics in organizations, for example, AT&T, Motorola, and Campbell Soup Co., with an effective diversity culture. These characteristics include the following helpful insights: • Leaders and employees need to understand that a diverse workforce will have people with different perspectives and approaches to issues and problems at work and must truly value a variety of opinions and insights. • Leaders should recognize both the learning opportunities and the challenges that a culturally diverse workforce presents for the organization. • The organizational culture should create an expectation of high standards of performance and ethics from everyone. • The organizational culture should stimulate personal development and support openness to ideas. • The organizational culture should make workers feel valued.47 Generation Diversity and Ethics From a diversity perspective, a generation refers to an identifiable group that shares years of birth and significant historical and social life events at critical stages of their development. Most researchers agree that there are four broad categories of generations, as follows: • Mature: born from 1925 through 1944. • Baby boomers: born from 1945 through 1964. • Generation X: born from 1965 through 1981. Generation Y: born from 1982 through 2000. There are considerable differences as to the relevance of generation diversity in general and ethics in particular. In one study published by the Center for Creative Leadership, the researcher found 10 commonalities among generations that challenge generational stereotypes. Six of the commonalities are summarized as follows48: 1. All generations have similar values. In fact, they all value family the most. They also attach importance to integrity, achievement, love, and competence. • Chapter 2 2. 3. Individual and Organizational Ethics Everyone wants respect; they just define it differently. Trust matters. Distrust of the organization and in upper management is prevalent among all age groups. 4. All generations want leaders who are credible and trustworthy. They also want them to listen, be farsighted and encouraging. 5. Organizational politics are a problem. Employees of all ages know that political savvy is a critical component in career advancement and upper-level management. 6. No one really likes change. Resistance to change has nothing to do with age; it is all about how much one has to gain or lose with the change. We are not claiming there are no differences between the generations. Rather, on a number of important workplace issues, the presumed conflicts and differences are more stereotypes than real. In later chapters, we address some of the differences that appear to exist among generations. For now, we note several ethics results from the 2008 World of Work report49: Generation Y respondents think that 22 percent of their Gen Y coworkers as a group • are ethical, 33 percent of Gen X coworkers as a group are ethical, 38 percent of baby boomer coworkers as a group are ethical, and 44 percent of mature coworkers as a group are ethical. Clearly, the Generation Y respondents did not think highly of the ethics of their coworkers. In contrast, 58 percent of Gen Y respondents perceived themselves as ethical, which is greater but still troubling. • Generation X respondents think that 36 percent of their coworkers as a group are ethical, 28 percent of Gen Y coworkers as a group are ethical, 41 percent of baby boomer coworkers as a group are ethical, and 50 percent of mature coworkers as a group are ethical. In contrast, 71 percent of Gen X respondents perceived themselves as ethical. Once again, a significant gap exists between self-perception of being ethical and the perceptions of coworkers’ ethics in the four generations. • Baby boomer respondents think that 56 percent of baby boomer coworkers as a group are ethical, 16 percent of Gen Y coworkers as a group are ethical, 29 percent of Gen X coworkers as a group are ethical, and 61 percent of mature coworkers as a group are ethical. In contrast, 78 percent of baby boomers describe themselves as ethical. There is a substantial gap between baby boomers perceiving most (61 percent) of their coworkers as ethical versus Gen Y coworkers (only 16 percent). The Gen Y employees, by definition, are newest to their organizations. They have not had as much opportunity to demonstrate that they are ethical and their peers may be presumed as unethical because of generation gap stereotypes. Also, consider the concept of small numbers bias, which refers to the tendency to view a few incidents, cases, or experiences with individuals as representative of a larger population. For example, observations of unethical conduct by a few Gen Y coworkers may be seen as applying to the supermajority of them and fits the popular stereotype of this generation as not being very ethical as a whole. The contrasting interpretation is that the findings for Gen Y are accurate, which would be a sobering generality. A recent study of ethics of U.S. high school students (Gen Y), who will be employees within several years, presents mixed messages. The data were gathered through a national sample of almost 30,000 respondents in public and private high schools.50 The attitudes and intentions expressed are ethical. In brief, (1) 98 percent said “It’s important for me to be a person with good character”; (2) 96 percent said, “It’s important to me that people trust me”; (3) 93 percent agreed with the statement “In business and the workplace, trust and honesty are essential”; (4) 91 percent said, “People should play by the rules even if it means they lose”; and (5) 84 percent affirmed, “It’s not worth it to lie or cheat because it hurts your character.” In contrast, a large majority of the high school respondents (Gen Y) admitted personal behaviors that did match their ethical aspirations and attitudes. Perhaps this 51 52 Part 1 Introduction and Ethical Foundations is influenced by the 59 percent of respondents who agreed with the following survey statement: “In the real world, successful people do what they have to do to win, even if others consider it cheating.” Most of the users of this text are members of Gen Y. If the data presented are representative, the vast majority of Gen Y respondents did not characterize their coworkers as a group to be ethical. In addition, only 28 percent of Gen X respondents and 16 percent of baby boomer respondents perceived their Gen Y coworkers as a group to be ethical. Sexual Harassment Sexual harassment is one of the many categories of harassment that may occur in the workplace. Harassment refers to verbal or physical conduct that denigrates or shows hostility or aversion toward an individual because of that person’s race, skin color, religion, gender, national origin, age, or disability. Harassment can also occur if conduct is directed toward a person’s relatives, friends, or associates.51 Harassment does one or more of the following: • Has the purpose or effect of creating an intimidating, hostile, or offensive work environment. • Has the purpose or effect of unreasonably interfering with an individual’s work performance. • Otherwise adversely affects an individual’s employment opportunities. Harassment in its more serious and aggressive forms, such as sexual harassment, reflects (1) the obedience and punishment stage of moral development; (2) the absence of moral intelligence; (3) the absence or lack of consideration of ethical intensity; (4) the use of the self-serving hedonist and might-equals-right principles; (5) violation of all balancing interests principles—means–end, utilitarian, and professional standards; and (6) violation of all concern-for-others principles—disclosure, distributive justice, and golden rule. Sexual harassment generally refers to unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.52 Sexual harassment consists of two types of prohibited conduct in the United States: (1) quid pro quo—in which submission to harassment is used as the basis for employment decisions, and (2) hostile environment—in which harassment creates an offensive working environment. Consider these basic questions from a legal perspective in the United States: • If an employee “voluntarily” has sex with a manager, does this mean that she (or he) has not been sexually harassed? Not necessarily. If an employee by her or his conduct shows that sexual advances are unwelcome, it does not matter that she (or he) eventually “voluntarily” succumbs to the harassment. In deciding whether the sexual advances are “unwelcome,” the courts will often allow evidence concerning the employee’s dress, behavior, and language as indications of whether the employee “welcomed” the advances. • Is an employer liable for quid pro quo harassment engaged in by its managers? In general, an employer is held to be strictly liable when a manager engages in quid pro quo harassment. • What is hostile environment harassment? A hostile work environment occurs when an employee is subjected to comments of a sexual nature, offensive sexual materials, or unwelcome physical contact as a regular part of the work environment. In general, a single isolated incident will not be considered evidence of hostile environment harassment unless it is extremely outrageous and egregious conduct. The courts look to see whether the conduct is both serious and frequent. Courts are more likely to find a hostile work environment as being present when the workplace includes sexual propositions, pornography, extremely vulgar language, sexual touching, degrading comments, or embarrassing questions or jokes. Supervisors, managers, coworkers, and even customers can be responsible for creating a hostile environment. Chapter 2 Individual and Organizational Ethics Is an employer liable for hostile environment harassment? It depends on who has created the hostile environment. The employer is liable when supervisors or managers are responsible for the hostile environment, unless the employer can prove that it exercised reasonable care to prevent and promptly correct sexually harassing behavior and that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer. Any harassment policy, including one on sexual harassment, should contain (1) a definition of the harassment, (2) a harassment prohibition statement, (3) a description of the organization’s complaint procedure, (4) a description of disciplinary measures for such harassment, and (5) a statement of protection against retaliation.53 All individuals need a clear understanding of harassment. California has a fairly well-developed law on the dimensions that constitute sexual harassment. The law reflects the ethical concepts and principles we noted previously. Organizations with strong ethical cultures that embrace diversity incorporate these provisions both formally and informally. The core provisions with examples of unacceptable behaviors include the following54: Verbal harassment: epithets, derogatory comments or slurs. Examples: Name-calling, • belittling, sexually explicit or degrading words to describe an individual, sexually explicit jokes, comments about an employee’s anatomy and/or dress, sexually oriented noises or remarks, questions about a person’s sexual practices, use of patronizing terms or remarks, verbal abuse, graphic verbal commentaries about the body. • Physical harassment: assault, impeding or blocking movement, or any physical interference with normal work or movement, when directed at an individual. Examples: Touching, pinching, patting, grabbing, brushing against or poking another employee’s body, requiring an employee to wear sexually suggestive clothing. • Visual harassment: derogatory posters, cartoons, or drawings. Examples: Displaying sexual pictures, writings, or objects, obscene letters or invitations, staring at an employee’s anatomy, leering, sexually oriented gestures, mooning, unwanted love letters or notes. • Sexual favors: unwanted sexual advances that condition an employment benefit on an exchange of sexual favors. Examples: Continued requests for dates, any threats of demotion, termination, etc., if requested sexual favors are not given, making or threatening reprisals after a negative response to sexual advances, propositioning an individual. Sexual harassment continues to be a problem in the United States.55 In a review of a number of studies of the incidence of sexual harassment in the United States, it was found that 58 percent of the women respondents reported having experienced potentially harassing behaviors, and 24 percent report having experienced sexual harassment at work.56 Sexual harassment represents a serious form of workplace aggression. Leaders have a strong responsibility to do everything in their power to prevent sexual harassment from occurring. When it does occur, it needs to be dealt with quickly and firmly.57 • Insights for Leaders Diversity programs and initiatives often run into unanticipated problems. Diversity awareness training programs may backfire if they seem to reinforce stereotypes or highlight differences that employees have tried to minimize in order to fit into the organization’s culture. Special diversity programs offered only to some groups may feed the belief that they are gaining an unfair advantage. Employees assigned to work in markets that match their individual diversity-based differences may view that as limiting rather than maximizing the contributions that they can make. Affirmative action programs implemented with a heavy hand may create a stigma for all members of groups targeted to benefit. As a result, even the best qualified people are presumed to have acquired their positions because of their demographic attributes rather than 53 54 Part 1 Introduction and Ethical Foundations on the basis of merit. Networking or caucus groups may lead to increased segregation and fragmentation if implemented in ways that focus on their diversity differences rather than on their common goals. Leading diversity successfully requires developing a strong organizational and ethical culture that values individual differences and ensures that the talents of all employees are used to their fullest extent. Implementing the variety of changes that may be needed to lead diversity changes effectively takes time in most organizations. During that time, many challenges will arise along the way. Among the most difficult challenges that leaders face as they attempt to implement these diversity-based changes are anticipating and addressing the reactions of members of the dominant culture, • who may think that they are about to lose the influence they previously had; • capturing and synthesizing opinions on diversity initiatives from employees and using them as input for reaching a shared understanding on them; and • avoiding real and perceived tokenism and quota systems that may help the organization achieve its quantitative diversity goals, but can be destructive to developing a positive culture.58 Perhaps the biggest challenge to leaders, however, is understanding that diversity initiatives often have organizational consequences. On the one hand, diversity can enhance a team’s ability to solve problems creatively. On the other hand, the price of such creativity may be heightened conflict within the team. Similarly, changing the mix of men and women in a team or department toward a 50–50 split may improve the attitudes of the women involved while irritating the men. Leaders shouldn’t expect diversity-related initiatives to affect members of the organization in uniformly positive ways. They should consider carefully which initiatives are most important for the organization to achieve, and be prepared for some resistance from employees who do not gain personally from them.59 Leaders need to recognize that the foundational elements for achieving positive diversity (1) start with understanding and perhaps changing key aspects of the organization’s culture, (2) proceed to understanding and perhaps changing key aspects of the ethical dimensions of the organization culture, leadership that models ethical behaviors, and formal policies and mechanisms to ensure ethical decisions; and (3) conclude with a portfolio of diversity initiatives, diversity policies, and supportive diversity practices. Verizon Communications has been ranked as a corporate leader in diversity by a number of organizations and magazines, such as Business Week, Fortune, DiversityInc, Black Enterprise, LATINA Style, and Working Mother. Verizon, headquartered in New York, is the second largest U.S. telecommunications services provider with operations in 28 states and approximately 235,000 employees.60 The following Diversity Competency feature provides diversity leadership insights that are relevant to many organizations.61 You will see that diversity is integrated with Verizon’s culture (core values) and ethics. Diversity competency Verizon’s Workplace Diversity Ivan Seidenberg, the chairman and CEO of Verizon, set the tone and top-level leadership expectations through these words (and in many other ways): It is imperative that we continue to uphold the Verizon commitment and core values: put customers first, act with integrity, treat people with respect, be accountable, and Chapter 2 raise our standards of performance. This means that we also have to do more than simply follow the law: instead, we have to do the right thing—and we have to do it every day. Ethical conduct is the foundation of any lasting business success. For Verizon to succeed and win in the competitive marketplace, our brand must stand for integrity, trust and solid ethical standards. Each of us contributes to Verizon’s success in unique ways, but we share a collective responsibility to “do the right thing” and behave ethically at all times. Diversity is viewed as an integral part of Verizon’s business. The extensive discussion of diversity on its website (www.verizon.com) states: “At Verizon, diversity means embracing differences and variety including age, ethnicity, education, sexual orientation, work style, race, gender and more. When diversity is a part of a company’s culture, as it is at Verizon, everyone benefits—customers, suppliers and employees. Diversity isn’t just a concept at Verizon. It’s an integral part of the business. Diversity drives everything from workforce development and supplier relationships to economic development, marketing and philanthropy. Verizon’s Code of Business Conduct clearly spells out what is expected from employees when it comes to valuing and respecting the diversity of others. The commitment to diversity Individual and Organizational Ethics 55 begins at the top of the company, and progress is measured like any other business objective. Executives are accountable for promoting diversity within their units. They are rewarded for successes through a performance incentive linked to their short-term compensation.” Verizon has an explicit diversity strategy. It is expressed as follows: “The goal of our diversity strategy is to have an aligned and integrated workplace where diversity is transparent, and where Verizon is an inclusive organization that leverages the diversity of employees, customers and supplies for increased productivity, profitability and an enhanced reputation.” The components of the strategy include: • The Inclusion Index—Measures employees’ sense of belonging through an index developed by our research team based on responses to our Employee Opinion survey. The survey also measures employee satisfaction. • Diversity Performance Incentive—A measure that tracks the workforce composition in each line of business, as well as the number of hires and promotions of diverse candidates. Each line of business has a unique goal, depending upon their individual unit’s composition. • Supplier Diversity—Measure derived from the procurement opportunities and developing and advocating a diversified supplier base. To learn more about Verizon, go to www.verizon.com. Stakeholder Responsibility and Ethics Stakeholder responsibility holds that leaders and other employees have obligations to identifiable groups that are affected by or can affect the achievement of an organization’s goals.62 Various ethical principles are used by different parties as a basis for justifying stakeholder responsibility. The organization interests principle suggests that leaders should consider the desires or demands of different stakeholders for the good of the organization. The utilitarian principle suggests that leaders should act on the basis of the relative harm or good from their decisions on each stakeholder group. The distributive justice and golden rule principles suggest that the leaders’ decisions should strive to be equitable and take into account how each stakeholder group might experience and feel about their decisions. Stakeholders are individuals or groups that have interests, rights, or ownership in an organization and its activities. Customers, suppliers, employees, and shareholders are examples of primary stakeholder groups. Each has an interest in how an organization acts. These stakeholder groups can benefit from an organization’s successes and can be harmed by its mistakes. Similarly, an organization has an interest in maintaining the general well-being and effectiveness of stakeholder groups. If one or more stakeholder Learning Goal 4. Explain the nature of stakeholder responsibility and its ethical basis. 56 Part 1 Introduction and Ethical Foundations groups were to dissolve their relationships with the organization, the organization would suffer.63 For any particular organization, some stakeholder groups may be relatively more important than others. The most important groups—the primary stakeholders—are those whose concerns the organization must address to ensure its own survival. They directly impact the financial resources available to the firm. At colleges and universities, these stakeholders include students, parents, faculty members, staff, and suppliers (e.g., food services, utilities, bookstores). They are directly impacted by various decisions of the top leaders of the colleges and universities. Secondary stakeholders are also important because they can take actions that can damage or assist the organization. Secondary stakeholders often include governments (especially through regulatory agencies), unions, nongovernmental organizations, activists, political action groups, and the media. During the recent economic crisis in the United States, the federal government became a primary stakeholder to a number of financial institutions as a result of providing billions of dollars in financial support to them.64 Stakeholder Pressures Each stakeholder group has somewhat different expectations of the organization. Each group cares more about some aspects of an organization’s activities and less about others. Leaders have to assess the relative importance of primary and secondary stakeholders, including identification and assessment of the many pressures and issues that must be considered in their decision making. Table 2.3 provides examples of these general types of pressures. All of these stakeholders are demanding to be treated ethically with renewed expectations and pressures for truthfulness and fairness.65 In some situations, there are trade-offs in addressing the preferences of different stakeholders, such as improved benefits being sought by employees versus higher dividend payouts being sought by shareholders. Ethical dilemmas occur for leaders who strive to implement a stakeholder responsibility approach in their decision. TABLE 2 . 3 Examples of Types of Pressures from Primary Stakeholders EMPLOYEES • • • • Pay and benefits Safety and health Rights at work/global labor standards Fair/ethical treatment in hiring, reviews, promotion, and related areas SHAREHOLDERS • • • • Demands for efficiency/profitability Viability (sustainability) Growth of investment Ethical disclosure of financial information CUSTOMERS • • • • • Competitive prices Quality and safe products Respect for customers’ privacy Concern for environment Truthful/ethical advertising and sales practices SUPPLIERS • Meet commitments • Repeat business • Fair trade practices/ethical treatment Chapter 2 Individual and Organizational Ethics Leaders in the same organization may even differ among themselves with respect to66 the importance they place on various stakeholders, • their beliefs as to the positive/negative consequences that different stakeholders will enjoy/suffer, and • their beliefs as to the likelihood that certain consequences will occur. Consider a sample of stakeholder issues that have ethical implications by leaders within an organization as well as between organizations.67 Some leaders think it is ethically right to give uniform raises to all employees when raise money is extremely limited. Others think it is ethically right to continue to give performance-based raises in such circumstances. Some leaders think it is ethically right to focus only on performance evaluations when conducting layoffs. Others think it is ethically right to consider employee personal considerations. Some leaders think it is ethically right to monitor employees’ nonworkplace conduct. Others think it is ethically right to limit surveillance to workplace conduct such as theft and personal use of the Internet. Some leaders think it is ethically right to outsource as much work as possible to firms in foreign countries as a means of cutting labor and other costs to maximize profits for shareholders. Others think it is ethically right to retain as much work as possible in house within the home country. The following Ethics Competency feature reports on the importance of multiple stakeholders to Johnson & Johnson’s in striving to behave ethically as expressed through its credo.68 Johnson & Johnson (J&J) invents, develops, and produces healthcare products for the consumer, including pharmaceutical, medical devices, and diagnostic markets. J&J is headquartered in New Brunswick, New Jersey, and has more than 250 companies operating in 60 countries. The firm has approximately 119,000 employees.69 Over a number of years, Johnson & Johnson has received numerous awards for “walking the talk” with respect to living stakeholder ethics as expressed through its credo. Three of the recent ones include (1) rated number one by Barron’s on their world’s most respected companies list, (2) rated top 10 in Fortune magazine’s most admired companies, and (3) honored by Boston College’s Center for Corporate Citizenship as one of the most socially responsible companies.70 • Ethics competency Johnson & Johnson’s Stakeholder Ethics and Principles William C. Weldon, chairman and CEO, comments “Johnson & Johnson is governed by the values set forth in our Credo, created by General Robert Wood Johnson in 1943. These principles have guided us for many years and will continue to set the tone of integrity for the entire Company . . .” The J&J statement of Our Credo follows: We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel 57 Part 1 Introduction and Ethical Foundations AP PHOTO 58 Robert Wood Johnson, author of Johnson & Johnson credo. free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens—support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. To learn more about Johnson & Johnson, go to www.jnj.com. Sustainable Development The protection of the natural environment is a key area of growing commitment and interest by organizations and stakeholders. Anne Mulcahy, chairman of Xerox, reflects this perspective in commenting: “Sustainable development is a proven catalyst for Xerox innovation. Repeated recognition by independent groups affirms both the economic and social value of our long-standing commitment to corporate sustainability.”71 Sustainable development is a pattern of resource use that strives to meet current human needs without compromising the ability of future generations to meet their own needs.72 The issues addressed under the umbrella of sustainable development are wide ranging. For example, the United Nations Division for Sustainable Development identifies 96 core indicators of sustainable development within a framework that contains 14 themes. A few of these themes include atmosphere, consumption and production patterns, land, freshwater, oceans, seas, and coasts, economic development, and natural hazards.73 Sustainable development is an area of major interest and increasing commitment by organizations—both private and public. Businesses often make reference to sustainability rather than sustainable development, a term that dominates the public and academic sectors.74 Chapter 2 Individual and Organizational Ethics The ethical rationales used for pursuing sustainability are many and often vary among business firms and their stakeholders. As one might expect, business firms are attracted to sustainability initiatives when top management comes to recognize that these are good for the organization. Sustainability initiatives often require capital investments with possible positive financial returns in the long run, but until recent years, were often perceived by top executives as costs incurred at the expense of current profits. At McDonald’s, one of the driving forces for sustainability is increased energy efficiency. McDonald’s spends more than $1.5 billion a year around the world to power its restaurants. About 80 percent of an average restaurant’s energy use is devoted to heating and cooling systems and running cooking appliances. Lighting is another significant draw. Robert Langert, McDonald’s vice president for corporate responsibility, comments: “Energy is really our No. 1 issue. When you look at the dollars we spend, and the impact we have on the environment, and the progress we can make to do better, and use our size and influence to make a difference, it’s energy.”75 A few of the sustainability initiatives for addressing energy management at McDonald’s include76: Pilot projects with a handful of recently built green restaurants. The one com• pleted in Chicago in 2008 has a green roof, a permeable parking lot, a 20,000gallon underground cistern to capture runoff water, LED lighting outside and a daylight harvesting system inside. Elsewhere green stores are planned for Brazil, France, Canada, and Germany. • Internally, it provides employee education and operates an Energy All-Star recognition program that showcases innovations, best practices and outstanding efforts on the part of workers. • Externally, the company requires its suppliers to join McDonald’s in working to improve any aspect of their business operation that affects the environment. The company does not mandate goals, but does require suppliers to provide annual measurements to McDonald’s in four environmental areas: energy use, water consumption, waste and recycling, and air pollution. Organizations that actively address sustainability issues benefit in a variety of ways. Most obviously, it often benefits their long-term profitability and, thus, shareholder interests. They build reputations for being responsible with multiple stakeholders. But they also develop new and valuable organizational capabilities. They learn to integrate the concerns of multiple stakeholders when planning and making key decisions. These organizations further develop abilities to innovate and learn. This is not to suggest that the leaders of business firms will always perceive sustainability initiatives and their relative merits as do other stakeholders.77 Yet, the opportunities for win–win relationships between stakeholders, especially shareholders and others, are increasingly evident in new organizational initiatives. For example, DuPont seeks to increase its financial prosperity through strategies that simultaneously produce reductions in the organization’s environmental footprint. Its strategies for sustainable development include integrated science and knowledge intensity. DuPont integrated the scientific fields of chemistry and bioengineering to produce a new line of polymers, called Sorona. This material has most of the desirable characteristics of older materials such as nylon, Dacron, and Lycra. However, unlike its predecessors, Sorona is produced using fermented corn sugar, a renewable resource, rather than the petrochemical-derived materials it replaces. Knowledge intensity is increased by initiatives including the creation of Simplyengineering, which generates revenue from selling copyrighted engineering guidelines, calculations, and models, as well as SafeReturns, a DuPont consultancy that helped Texas Instruments reduce its workplace injuries by 65 percent. The environmental sustainability attained by DuPont’s integrated science and knowledge intensity strategies is assessed with a customized metric called the “shareholder value added per pound of production” (SVB/lb). This metric helps DuPont 59 60 Part 1 Introduction and Ethical Foundations focus on shareholder value creation through increased productivity, waste reduction, and the development of new services and other sources of revenue generation. At the same time, it assists DuPont in meeting its goals for decreasing energy consumption and toxic emissions—all essentially by producing “more value and less stuff.”78 Assessing Responsibility to Stakeholders With heightened interest in stakeholder responsibility, many organizations are discovering that they can’t avoid having others assess how well they perform in this respect. Business sources, such as Fortune, Forbes, and the Dow Jones Sustainability Index, rate various aspects of organizational and stakeholder achievements annually. Many stakeholders are pressuring business leaders to abandon the practice of placing their sole emphasis on short-term shareholder profits and to instead contribute more actively to other stakeholders. One approach to assessing an organization’s stakeholder and ethical responsibility is to consider whether it merely reacts to ethical pressures as they arise or anticipates and addresses ethical concerns proactively. Several themes found in firms with a proactive commitment to assessing its stakeholder ethics and responsibility are discussed next.79 Disclosure The firm is transparent, providing comprehensive stakeholder environmental information to the public. The firm produces reports annually that review its stakeholder and environmental policies, goals, and achievements as well as financial performance. The firm often provides stakeholder and environmental information on its company website or in other published materials, as with McDonald’s, Xerox, and Johnson & Johnson. A strong corporate responsibility report might use the Global Reporting Initiative (GRI) guidelines as a framework for reporting. The GRI is a not-for-profit organization located in Amsterdam, The Netherlands. It suggests global standards that improve the consistency and comparability of reports. Some companies are now producing “In Accordance with GRI” reports. This is the highest level of disclosure recognized by the GRI. The organization also provides disclosure of goals and performance for key stakeholder and environmental metrics, such as workplace diversity data, workplace safety data, and energy consumption data.80 Communication and Engagement The firm actively seeks to communicate with various groups about its environmental performance. This allows the organization to present progress made and to learn from the groups about what future expectations may be. In some cases, such as AT&T, Xerox, and Walmart, the firm will have established a “road show” through which it meets with various groups about stakeholder and environmental performance or development areas of concern. The firm uses advisory committees to solicit regular input on key issues. Communication is a precursor to action. The firm takes what it learns from the interaction with stakeholders and strives to ensure that business practices adapt to meet changing needs. Proactive Management The firm is committed to going beyond minimum compliance requirements and integrating stakeholder responsibility into board governance, executive compensation, and management policies. Compliance is no longer enough—if indeed it ever was. The leaders integrate stakeholder and environmental issues into both day-to-day operations and into its managerial, executive, and fiduciary governance. This can mean creating a stand-alone corporate responsibility department and a cross-functional executive committee. At the board level, the firm has a corporate stakeholder responsibility committee to regularly evaluate and oversee social and environmental issues. It Chapter 2 Individual and Organizational Ethics has a formal chain of command to handle these issues—from the board through line employees—to ensure that progress is not driven solely by crises. The organization recognizes that these issues will not be led properly unless they are included in management compensation incentives and reviews. There are ways to measure stakeholder and environmental progress, determining the proper metrics and setting up systems to collect relevant data, such as air and water pollution levels, workforce diversity, employee turnover, employee safety, energy consumption, and product safety. Creating Shareholder Value The organization views stakeholder responsibility as central to its long-term efforts to create shareholder value. It looks at how stakeholder and environmental issues can affect sales, costs, and reputation. For example, on the sales side, the firm recognizes that future sales depend on delivering products that are kinder to the environment, such as fuel-efficient cars or energy-efficient computers. The well-managed company recognizes the need for diverse workforces, managers, and boards to relate to the increasing diversity of its consumer base. From a cost perspective, it recognizes that proactive leadership of environmental and stakeholder risks can substantially lessen the uncertainties and liabilities created by changing regulatory requirements and new knowledge of emerging risks. Top leaders recognize that costs can be reduced through environmental initiatives, such as reducing energy intensity or minimizing waste. There is a recognition that its customers, suppliers, employees, and others would rather do business with a company that is mindful of its power and its ability to affect people’s lives. Xerox’s Self Assessment Xerox is a firm that mirrors these four themes. The 58-page Xerox document titled Our Commitment to Global Citizenship: The 2008 Report illustrates our point. A few of the comments by Anne Mulcahy, the chairman of Xerox, suggests the firm’s sense of stakeholder and environmental responsibility and ethics. She comments81: Our people take great pride in the culture they have created—a culture that values Xerox both as a profit-making enterprise and as an institution that strives to be a positive force in the world around us. You will see that philosophy running throughout this report. It’s organized around five themes that capture the essence of our citizenship efforts. • • • • • Conducting our business with integrity and transparency builds credibility and attracts investors. Aligning our resources around customer need provides the revenue stream that enables investment in innovation and future growth. Nurturing a greener world through sustainable innovation and development saves money, creates value and helps develop new markets. Creating a great workplace for our people strengthens our competitiveness. Leveraging our resources to make our world better improves the quality of life for our people and the economic climate for our customers. A number of specific measures (data) and discussions are presented for each of these themes. Consider this one example. Xerox is well on the way to achieving the goal of a 25 percent reduction in greenhouse gas emissions by 2012. In the five years between 2002 and 2007, it cut energy consumption by 19 percent and greenhouse gas emissions worldwide by 21 percent. And in support of customer climate protection goals, 80 percent of new products introduced in 2007 met the U.S. Environmental Protection Agency’s tougher ENERGY STAR requirements. 61 62 Part 1 Introduction and Ethical Foundations Chapter Summary 1. Describe the stages of moral and ethical development. 2. Explain and apply the core concepts used by individuals and organizations to make ethical decisions. 3. Describe some ethics-based initiatives for fostering diversity in organizations. 4. Explain the nature of stakeholder responsibility and its ethical basis. Stages of moral development are stages through which individuals evolve, ranging from the lowest stage (obedience and punishment orientation) to the highest stage (universal ethical principles). These personal phases of moral development focus on the ethical reasoning used to justify choices in decision situations. The higher stage of moral development is used by some as an indicator of moral intelligence—the mental capacity to determine how universal ethical principles that cut across the globe should be applied to personal values, goals, and actions. Ethical misconduct in the workplace continues to be demonstrated by some individuals from the top through the lowest levels of the organization. The creation of a strong ethical culture by leaders makes a major difference in the frequency and severity of ethical misconduct. Severity of misconduct is illustrated through the six factors that comprise ethical intensity—the degree of moral importance given to an issue. Numerous principles and rules have been suggested to provide an ethical justification for a person’s and organization’s decisions and actions. We highlighted three self-serving principles, three balancing interests principles, and three concern-for-others principles. The complexity of applying these principles and rules is often played out in decision-making situations in which the parties assess their relative concern for the affected individuals, the benefits and costs of alternative courses of action, and determination of who has what rights. The parties’ satisfaction with how these thorny ethical issues are resolved depends somewhat on the presence of procedural justice—the perceived fairness of the rules and guidelines used to make decisions—and interactional justice. Diversity must be accompanied by an ethical foundation to be meaningful. The implementation of diversity initiatives is typically anchored in one or more of the balancing interests principles and concern-for-others principles. Positive diversity is very much influenced by the presence of an ethical culture. We reviewed a profile of organizational characteristics that foster an effective diversity environment. We reviewed the four broad categories of generation diversity and how each of these generations tends to view the ethical standards of those in their own generation and those in other generations. Harassment and sexual harassment, in particular, was discussed as an ongoing challenge in organizations. The legal, ethical, preventive, and corrective dimensions of sexual harassment were reviewed. Stakeholder responsibility holds that leaders and other employees have obligations to identifiable groups that are affected by or can affect the achievement of an organization’s goals. Various stakeholder groups use various ethical principles as a basis for justifying stakeholder responsibility. Each stakeholder group typically has somewhat different expectations of the organization. Leaders of organizations are increasingly challenged by stakeholder pressures, each with its own configuration of ethical justifications, to make decisions and pursue goals consistent with its own interests. Sustainable development was presented as a domain with ethical underpinnings and one in which stakeholders may find common grounds for action. Leading for-profit organizations are increasingly embracing the need to accept and assess responsibility to multiple stakeholders—not just their shareholders. However, shareholders continue to be the dominant stakeholder group for top executives. Effective means of accepting responsibility to stakeholders include indicators of (1) disclosure, (2) communication and engagement, (3) proactive management, and (4) creating long-term shareholder value. Chapter 2 Individual and Organizational Ethics 63 Key Terms and Concepts Concentration of effect, 39 Disclosure principle, 41 Distributive justice principle, 41 Employment at will, 44 Ethical intensity, 38 Generation, 50 Golden rule principle, 41 Harassment, 52 Hedonist principle, 40 Hostile work environment, 52 Interactional justice, 46 Magnitude of consequences, 38 Means–end principle, 41 Might-equals-right principle, 40 Moral intelligence, 36 Organization interests principle, 40 Organizational culture, 49 Probability of effect, 38 Procedural justice, 46 Professional standards principle, 41 Proximity, 39 Sexual harassment, 52 Small numbers bias, 51 Social consensus, 38 Stages of moral development, 34 Stakeholder responsibility, 55 Stakeholders, 55 Sustainable development, 58 Temporal immediacy, 39 Utilitarian principle, 41 Discussion Questions 1. 2. 3. 4. 5. Go to www.xerox.com. In the search box, type in “corporate governance guidelines.” Open the document titled “Corporate Governance Guidelines at Xerox.” Identify at least two of the specific ethical principles that are reflected in this document. What is a specific provision that illustrates each of the principles identified? Review the Learning from Experience feature on Anne Mulcahy, chairman of Xerox, and other discussions of her leadership in this chapter. How would you evaluate her in relation to each of the six attributes of the diversity competency presented in Chapter 1? For each attribute on which Mulcahy is evaluated, identify the specific statement(s) about her that serve as a basis of your assessment. Think of an organization in which you have been employed (or are currently employed). What are your assessments of the stage of moral development and moral intelligence of the manager for whom you worked? What specific examples of this manager’s behaviors and decisions serve as the basis for your assessments? What are the similarities and differences between the organization interests principle and the utilitarian principle? What are the similarities and differences between the professional standards principle and the distributive justice principle? 6. From your personal perspective, what is your assessment of the ethical intensity of the grading system and practices used by an instructor in a course that you have completed? Your assessment should include an assessment of each of the six components of ethical intensity. 7. What specific aspects of procedural justice are suggested in the Change Competency feature on James McNerney, CEO of Boeing? 8. How would you assess Generation Y individuals as a group with respect to their general pattern of ethical behaviors and decision making within the work environment? Explain. If a generalization is possible, what is your overall assessment? Explain. 9. How did (or does) an organization for which you have worked (or do work) compare with the policies, practices, and goals of Verizon’s workplace diversity as presented in the Diversity Competency feature? Give specific comparisons of similarities and/or differences. 10. What specific ethical principles for guiding decisions and actions are illustrated in the Ethics Competency feature titled “Johnson & Johnson’s Stakeholder Ethics and Principles”? You should relate specific statements in the code to specific ethical concepts. 11. Sustainable development is discussed as an application of stakeholder responsibility. Think of an organization for which you have worked (or currently work). In what ways did it implement or fail to implement sustainable development initiatives? 64 Part 1 Introduction and Ethical Foundations Experiential Exercise and Case Experiential Exercise: Ethics Competency What Is Your Decision?82 Instructions Mark the preferred decision for each of the four incidents and reply to the two questions that follow each incident. This exercise may also be undertaken in a small group. The group members should make their choices individually and then discuss them with each other. They should attempt to reach a consensus on the preferred decision for each incident and the responses to the questions. 2. 3. Ethical Incidents 1. Barbara is a sales representative for Global Fashions Inc. One of her best customers, George, places a large order for linen jackets for the coming spring season. Barbara knows that Global has had production and delivery problems with these jackets. She also knows that George’s order will assure her year-end bonus. Should she: _____ A Take the order. There’s no guarantee that Global won’t meet the deadline, and George is sophisticated enough to know that sometimes problems happen in manufacturing. _____ B Warn George of the risk and put the sale at risk before taking the order, if George still wants to place it. _____ C Refuse the order, since she’s likely to disappoint a long-time customer by promising something that may not happen. Questions 1. What ethical principle or principles reflect your decisions? 2. How would you assess the ethical intensity in this situation? 2. Jose is a general manager of a division of Global Operations. In that capacity, he knows that his company is planning on making layoffs soon. Juan, a good friend in another division, tells Jose he is about to buy a new house that is much more expensive, but he’s confident that he can make the higher payments, because his career at Global is going well. Jose doesn’t know if Juan will be laid off but is concerned. Should he: _____ A Warn Juan of the upcoming layoffs. _____ B Encourage Juan to hold off on buying the house because “something is up” and he can’t say more. _____ C Let Juan’s direct supervisor know what Juan is doing. _____ D Stay out of the issue. Since Jose doesn’t know what’s going to happen to Juan, there’s really nothing to do. Questions 1. What ethical principle or principles reflect your decision? How would you evaluate the ethical intensity in this situation? Don is a sales representative for a local moving company. His friend Adam works as an auto salesman. Adam informs Don that people who move are surprisingly likely to buy new cars shortly thereafter because their commute has now changed. He tells Don, “I’ll tell you what. Give me the names of people you meet with to discuss moving, I’ll send them a welcome-to-the-neighborhood note. If any of them buy a car, I’ll give you a piece of my commission.” Don should: _____ A Give Adam the names—there’s no harm done. _____ B Offer to take Adam’s cards and give them to customers. _____ C Decline the offer. Questions 1. What ethical principle or principles reflect your decision? 2. How would you assess the ethical intensity in this situation? 4. You’ve been a manager at your company for five years and have developed an excellent reputation. Your future looks bright, which is a good thing since you have a family to support. Yesterday a fellow employee, Kim, came to you with a problem. Kim, an African-American woman who used to report to you, had just been turned down for a promotion. You believe she was very qualified for the position and perfectly capable of doing it with excellence. The candidate chosen was a white male with good qualifications but not as much experience or, in your opinion, ability as Kim. Steve, the manager who did not select Kim, happens to be a “rising star” whom you’ve known for years and with whom you get along pretty well. Steve couldn’t make you CEO and couldn’t get you fired, but he is in a position to help or hinder your career. What do you do? _____ A Encourage Kim to speak to the Human Resources department and offer to speak to them as well about your excellent opinion of Kim. _____ B Talk to Steve. _____ C Tell Kim that many (legitimate) factors go into a promotion decision and that such a decision can’t be judged from the outside. _____ D Talk to Steve’s supervisor. Questions 1. What ethical principle or principles reflect your decision? 2. How would you assess the ethical intensity in this situation? Chapter 2 Individual and Organizational Ethics 65 Case: Diversity Competency Consensual Relationship Agreements83 If you put individuals with common interests together for 40-plus hours per week, office romance is bound to happen. Statistics seem to bear that out: According to a survey by Valut.com, an online career center, 47 percent of the 1,000 professionals surveyed had been involved in an office romance, and another 19 percent would consider it. Of those individuals who had a romance, 11 percent had dated their managers or another manager. “This issue is not going away,” says Helaine Olen, coauthor of Office Mate: The Employee Handbook for Finding—and Managing—Romance on the Job (Adams Media, 2007). It’s crucial, she says, for managers to accept the likelihood of office romance and have policies and procedures in place to address it when it occurs. Most experts warn against forbidding office romance altogether. They see it as futile. “Our experience was if a company tried to forbid it, more people started dating for the thrill of it. It was counter-productive,” Olen says. This is an issue among every employee demographic, not just single 20-somethings, although in her experience members of each group handle the situation differently. For instance, “The average 22-year-old wasn’t concerned about who knew what and when. The older employees were more likely to keep it quiet. But it was still fairly common,” Olen says. Seventy-two percent of companies had no policy regarding workplace romance, according to the Society for Human Resource Management (SHRM) Workplace Romance Poll. “The vast majority of companies do not have rules around dating, and they should. Of the few that do, most of them involve a boss dating a subordinate. If they perceive a conflict of interest or see the relationship as disruptive or potentially disruptive, human resources should step in,” asserts Olen. One type of workplace policy that is being adopted is a consensual relationship agreement (CRA). A CRA is essentially a written “contract” in which the romantically involved parties acknowledge the following: • • • • • • Their relationship is voluntary and consensual. They agree to abide by the employer’s antidiscrimination, antiharassment, and workplace conduct policies. They promise to report any perceived harassment to management, if it occurs. They agree to behave professionally and not to allow the relationship to affect their performance. They agree to avoid behavior that offends others in the workplace. They agree not to engage in favoritism. This is especially an issue if one of the employees is in a higher management position and has the authority to influence rewards available to the other employee. Some individuals believe that the reasons for expecting employees who are in a relationship to sign a CRA include: Decreasing sexual harassment litigation risk. After a work• place romance fails, the employee sometimes claims to have been pressured into the relationship. A CRA signed after the relationship has started can effectively refute • • • such claims because it provides compelling evidence that the employees entered the relationship voluntarily. But what if employees refuse to sign? The CRA could be a condition of employment. Some individuals advise approaching employees about signing “love” contracts by showing them how the documents protect them, too, in the event the relationship turns sour. Even though an employee wants to keep things private, there’s always the risk of something going wrong. If there is a helpful, responsible way of working with the employee in place, the situation is more like to be normalized. Reducing perceptions of favoritism. Favoritism—or the appearance of it—isn’t just poor employee relations. In some cases, it is a cause for sexual harassment lawsuits. In a few states, the interpretation of sexual harassment laws includes third parties. If an employee views a supervisor as favoring a subordinate due to their relationship, the employee can sue the company—and the supervisor personally—for sexual harassment. Creating a forum to discuss professional workplace behavior. A CRA provides a forum for human resource professionals to talk to dating employees about what is appropriate and inappropriate workplace behavior. They can remind employees to be sensitive to their coworkers, especially concerning displays of physical affection, verbal affection, or lovers’ quarrels. Reminding dating employees of lack of privacy in the workplace. When employees bring their relationships into the workplace, they don’t have a legal right to privacy. They are governed by a no-harassment policy. This doesn’t mean the employer has the right to ask about intimate details, but when employees are in the workplace, the employer has the right to set reasonable rules. Dating employees should not instant message or e-mail each other about intimate issues. Even an innocuous note such as “Where do you want to go to dinner tonight?” can be misconstrued if the relationship goes sour. Employees in a relationship should only speak privately and in person about personal issues. Questions 1. Critics of CRAs assert that they are too intrusive, ineffective, and unnecessary and that they can cause as many problems as they solve. Identify the specific reasons and examples that might justify these criticisms. 2. How would you assess the ethical intensity of CRAs from the perspective of the employer? From the perspective of the employees in a consensual relationship? 3. What specific ethical principles might be used to justify the use of CRAs? Explain. 4. What ethical principles might be used by employees in consensual relationships to oppose signing such an agreement? Explain. 5. Do you personally favor or oppose the use of CRAs in the workplace? Explain. part 2 The Individual in Organizations chapter Understanding Individual Differences 3 Perceptions and Attributions 4 Learning Concepts to Improve Performance 5 Motivating Employees 6 Motivation: Goal Setting and Reward Programs 7 Workplace Stress and Aggression 8 67 chapter 3 Understanding Individual Differences Learning Goals After studying this chapter, you should be able to: 1 Explain the basic sources of personality formation. 2 Identify a set of personality dimensions that affect performance. 3 Describe the attitudes that affect performance. Learning Content Learning from Experience Steve Jobs at Apple Bases of Personality Self Competency David Neeleman of JetBlue Personality and Behavior Teams Competency Why Personality Is Important at Starbucks Work-Related Attitudes Across Cultures Competency Mercedes-Benz 4 Diversity Competency Deloitte & Touche Explain how emotions impact employees’ performance. Emotions at Work Experiential Exercises and Case Experiential Exercise: Self Competency What Are Your Cultural Values? Experiential Exercise: Self Competency What’s Your Emotional IQ? Case: Self Competency Larry Ellison at Oracle Computer Learning from Experience Steve Jobs at Apple ROBERT GALBRAITH/REUTERS/LANDOV When Steve Jobs returned to Apple in 1997, he was remembered as the wonder boy who, with Steve Wozniak, at the age of 21 founded Apple Computer in his parents’ garage back in 1976. Worth more than $300 million by the age of 30, he was thrown out of Apple in 1985 because of his “personality” clashes with others. Now more than two decades later, he has been called by Jack Welch and others the most successful CEO today. Jobs is a controversial leader. He publicly ridicules Apple’s competitors, who he casts as mediocre, evil, and lacking taste. His subordinates are geniuses or “bozos,” indispensable or no longer relevant. Individuals at Apple know they can flip from one category to another at a moment’s notice. Jobs doesn’t live with his mistakes; he simply rationalizes them away and moves on. Subordinates have been made to cry at meetings and have been fired during his angry tantrums. Former Apple public relations executive Laurence Clavère said that before going into a meeting with Jobs, she had to develop a mind-set like a bullfighter entering the ring—kill or be killed. According to Jean-Louis Gassée, a former Apple executive who once worked with Jobs: “Democracies don’t make great products. You need a competent tyrant” and Jobs fit the bill. When John Sculley led the fight to ouster Jobs in 1985 and then replaced Jobs at Apple, Sculley likened Jobs to the Russian revolutionary Leon Trotsky saying that he was a zealot with visions so pure that he couldn’t accommodate the imperfections of the world. To learn more about Apple Computer, go to www.apple.com. When Jobs returned to Apple in 1997, Apple was losing money and market share. Jobs immediately dug into the details of the business. He created a sense of urgency that led the company back to profitability. No engineering spec, no design detail was too small for his scrutiny. Today, he lists himself as co-inventor on 103 separate Apple patents, everything from the user interface for the iPod to the support systems for the glass staircases used in Apple’s retail stores. He makes his own rules. He drives a Mercedes without a license plate and parks it in handicapped spaces. When doctors discovered an abdominal cancerous tumor in 2003, they told him that surgery was the best decision. Jobs sought treatment with a special diet while launching a lengthy exploration of alternative approaches instead of undergoing surgery. Several of the Apple board members said that this was probably not the best thing for his health. Jobs was stubborn and 70 Part 2 The Individual in Organizations resisted surgery for almost a year. After finding no cure on his own, he had a successful operation in 2004. Jobs only told a few individuals in his inner circle about the surgery. When he had health issues in 2009, however, he announced that he was taking a leave of absence from his role as CEO and temporarily appointed Tim Cook as CEO. When Jobs ran Pixar before selling it to Disney, Jobs personally negotiated bonuses with key executives. He often went to the board meetings saying that this is what he wanted to do for compensation—he didn’t wait for input from others. Unlike Microsoft, Apple has been labeled one of America’s least philanthropic companies. Jobs ended all of Apple’s long-standing corporate philanthropy programs when he returned in 1997 and has not restored any of these. He also has not shown any interest in handing over the reins to another person to create a different kind of personal legacy.1 As the Learning from Experience feature indicates, individuals react to how they are treated by others. You might ask yourself whether you would be willing to work for Jobs. Depending on your personality, preferences, and goals, your answer might be either yes or no. As an employee and future leader, you must recognize and appreciate individual differences in order to understand and respond appropriately to the behavior of individuals in organizations.2 In Part 2 of this book, we cover individual processes in organizations. In this chapter, we focus first on the individual to help you develop an understanding of organizational behavior. Individual differences are the physical, personality, attitudinal, and emotional attributes that vary from one person to another. What are some individual differences about Steve Jobs that stand out for you? What are your individual differences? The individual differences that characterize you make you unique. Perhaps you have a dynamic personality and enjoy being the center of attention, whereas others you know avoid crowds and do not have the same energy level as you. Is that good or bad? The answer, of course, is that it depends on the situation. Whenever you attempt to understand individual differences, you must also analyze the situation in which the behavior occurs. A good starting point in developing this understanding is to appreciate the role of personality in organizations. In this chapter, we discuss individual differences in personality, attitudes, and emotions. We begin by addressing the concept of personality. Later in the chapter, we explore the role of attitudes and emotions in organizational behavior. Learning Goal 1. Explain the basic sources of personality formation. Bases of Personality Behavior always involves a complex interaction between the person and the situation. Events in the surrounding environment (including the presence and behavior of others) strongly influence the way individuals behave at any particular time; yet individuals always bring something of themselves to the situation. This “something,” which represents the unique qualities of the individual, is personality.3 No single definition of personality is accepted universally. However, one key idea is that personality represents personal characteristics that lead to consistent patterns of behavior. Individuals quite naturally seek to understand these behavioral patterns in interactions with others. Personality represents the overall profile or combination of stable psychological attributes that capture the unique nature of a person. Therefore, personality combines a set of physical and mental characteristics that reflect how a person looks, thinks, acts, and feels. This definition contains two important ideas. Chapter 3 Understanding Individual Differences 71 First, theories of personality often describe what individuals have in common and what sets them apart. To understand the personality of an individual, then, is to understand both what that individual has in common with others and what makes that particular individual unique. Thus, each employee in an organization is unique and may or may not act like someone else will act in a similar situation. This uniqueness makes managing and working with individuals extremely challenging. Second, our definition refers to personality as being “stable,” meaning that it remains somewhat the same through time. Most individuals intuitively recognize this stability. If your entire personality could change suddenly and dramatically, your family and friends would confront a stranger. Although significant changes normally don’t occur suddenly, an individual’s personality may change over time. Personality development occurs to a cerSelf Insight tain extent throughout life, but the greatest changes occur in early childhood. If individuals are products of biology, life How is an individual’s personality determined? Is personalwould have no higher meaning and purity inherited or genetically determined, or is it formed after years pose. It is personality that gives individuals of experience? There are no simple answers because too many meaning and purpose. Personality is what variables contribute to the development of each individual’s makes individuals different. personality. As Figure 3.1 shows, two primary sources shape perSteve Pinker, Author, The Blank Slate sonality differences: heredity and environment. An examination of these sources helps explain why individuals are different. Heredity Deeply ingrained in many individuals’ notions of personality is a belief in its genetic basis. Expressions such as “She is just like her father” or “He gets those irritating qualities from your side of the family, dear” reflect such beliefs. Genes determine height, eye color, size of hands, and other basic physical characteristics. Some individuals believe that personality is inherited; others believe that a person’s experiences determine personality. Our thinking is balanced—both heredity (genes) and environment (experiences) are important. Of course, some personality characteristics may be influenced more by one factor than the other. Some personality traits FIGURE 3.1 Sources of Personality Difference Personality Heredity Environment • Culture • Family • Group Membership • Life Experiences 72 Part 2 The Individual in Organizations seem to have a strong genetic component, whereas other traits seem to be largely learned (based on experiences).4 Heredity sets limits on the range of development of characteristics, and within this range environmental forces influence personality characteristics. However, recent research on the personalities of twins who have been raised apart indicates that genetics may play a larger role than many experts had believed. Some studies of twins suggest that as much as 50 to 55 percent of personality traits may be inherited. Further, inherited personality traits seem to explain about 50 percent of the variance in occupational choice. In other words, you probably inherited some traits that will influence your career choices. Furthermore, there is not one single gene that determines a person’s personality but a combination of genes.5 Environment Other individuals think that the environment plays a large role in shaping personality; in fact, the environment may have a more important role than inherited characteristics. That is, beyond what genes are inherited from your parents, the environment a person experiences as a child has an important role in molding one’s personality development. How a child is treated by adults and playmates and others influences the child’s personality. A person growing up in a warm and nurturing household is much more likely to be a well-adjusted person than a child growing up in a cold and sterile environment. Aspects of the environment that influence personality formation include culture, family, group membership, and life experiences. Culture Anthropologists have clearly demonstrated the important role that culture plays in personality development.6 A culture is not a symbolic pattern, but evolves under the stress of competing goals and other cultures. Cultures do not exist as simply static differences to be celebrated, but compete with one another as better or worse ways of getting things done. Individuals born into a particular society are exposed to family and societal values and to norms of acceptable or unacceptable behavior—the culture of that society. Culture also defines how various roles in that society are to be performed. For example, U.S. culture generally rewards individuals for being independent and competitive, whereas Japanese culture generally rewards individuals for being cooperative and group oriented.7 Culture helps determine broad patterns of behavioral similarity among individuals. However, differences in behavior—which at times can be extreme—usually are seen among individuals within a society. Most societies aren’t homogeneous (although some are more homogeneous than others). For example, one characteristic of Western cultures is that people often follow a work ethic in which hard work is valued and an unwillingness to work is sinful. But this value doesn’t influence everyone within Western cultures to the same degree. Although culture has an impact on the development of employees’ personalities, not all individuals respond to cultural influences equally. Indeed, one of the most serious errors that leaders can make is to assume that their subordinates are just like themselves in terms of societal values, personality, or any other individual characteristic. Cultural Values. A number of cultural values impact a person’s behavior at work. We believe that is particularly helpful in understanding individual and societal differences. To determine your cultural value profile, please go to the first Experiential Exercise at the end of this chapter on page 97 and complete the questionnaire. These values in combination influence the behaviors and decisions of employees in many organizations.8 Figure 3.2 shows how the five cultural dimensions covered in the Experiential Exercise vary between France, the United States, Canada, and Japan. Let’s explore each of these five cultural dimensions more closely. Chapter 3 Understanding Individual Differences FIGURE 3.2 Cultural Values in Four Countries 100 90 80 70 60 50 40 30 20 10 France Canada United States Japan 0 Power Distance Uncertainty Avoidance Individualism Gender Role Orientation Long-term Orientation Individualism versus collectivism is a fundamental work-related value that leaders must thoroughly understand to be effective in today’s global world. Individualism is the tendency of individuals to look after themselves and their immediate families. A culture high on individualism emphasizes individual initiative, decision making, and achievement. Everybody is believed to have the right to privacy and personal freedom of expression. Individuals in these countries generally do not believe that they share a common fate with others. They view themselves as independent, unique, and special. They are less likely to conform to the expectations of others. When group goals conflict with personal goals, individuals commonly pursue their own goals. In addition, seeking personal identity is highly valued in individualistic cultures. Personal achievement, pleasure, and competition are all highly valued. Countries characterized by an emphasis on individualism include the United States, Canada, New Zealand, the United Kingdom, and Australia. At the other end of the continuum, collectivism is the tendency of individuals to emphasize their belonging to groups and to look after each other in exchange for loyalty. Groups (relatives, communities, and organizations) focus on their common welfare. Collectivism usually involves emotional dependence of the individual on groups, organizations, and institutions. The sense of belonging and “we” versus “I” in relationships is fundamental. Individuals’ private lives are shaped by the groups and organizations to which they belong. Group goals are generally thought to be more important than the individual’s personal goals. Individuals in China, Japan, Taiwan, and South Korea care about whether their behavior would be considered shameful by the other members of their groups. They also avoid pointing out other individuals’ mistakes in public so that the others won’t lose face and harmony is maintained. Face-saving is important in these cultures because it allows individuals to retain their dignity and status. Power distance is the extent to which individuals in a society accept status and power inequalities as a normal and functional aspect of life. Countries that are “high 73 74 Part 2 The Individual in Organizations in power distance” are those whose citizens generally accept status and power inequalities; those “low in power distance” are those whose citizens generally do not. Countries that are high in power distance include Argentina, India, Malaysia, Mexico, the Philippines, and the Commonwealth of Puerto Rico. At the opposite extreme, countries that are low in power distance include Finland, Israel, Norway, and Sweden. (The United States is moderately low.) Individuals who are raised in a high power distance culture behave submissively with leaders and avoid disagreements with them. High power distance employees are more likely to take orders without question and follow the instructions of their leaders. In high power distance societies, subordinates consider bypassing their leaders to be an act of insubordination. In low power distance countries, employees are expected to bypass a leader if necessary in order to get their work done. When negotiating in high power distance countries, companies find it necessary to send representatives with titles equivalent to or higher than those of their bargaining partners. Titles, status, and formality are of less importance in low power distance countries. Uncertainty avoidance is the extent to which individuals rely on procedures and organizations (including government) to avoid ambiguity, unpredictability, and risk. With “high” uncertainty avoidance, individuals seek orderliness, consistency, structure, formalized procedures, and laws to cover situations in their daily lives. Societies that are high on uncertainty avoidance, such as Japan, Sweden, and Germany, have a strong tendency toward orderliness and consistency, structured lifestyles, clear specification of social expectations, and many rules and laws. In contrast, in countries such as the United States and Canada and in Hong Kong, there is strong tolerance of ambiguity and uncertainty. More secure and long-term employment is common in “high” uncertainty avoidance countries. In contrast, job mobility and layoffs are more commonly accepted in “low” uncertainty avoidance countries. Gender role orientation is the extent to which a society reinforces, or does not reinforce, traditional notions of masculinity versus femininity. A society is called masculine when gender roles are clearly distinct. Men are supposed to be assertive, tough, and focused on material success. Women are supposed to be more modest, tender, and concerned with the quality of life. In masculine-dominated cultures, gender roles are clearly distinct. Japan, Austria, Italy, Mexico, and Ireland are a few of the countries ranked as high in masculinity. Dominant values are material success and progress and money. A society is called feminine when gender roles overlap: Both men and women are supposed to be modest, tender, and concerned with the quality of life. In feminine-dominated societies, roles are often merged or overlap for sexes. A few of the countries ranked high on femininity are Denmark, Costa Rica, Finland, and Portugal. Dominant values include caring for others, emphasizing the importance of individuals and relationships, accepting that both men and women can be gentle, stressing the quality of work life, and resolving conflict by compromise and negotiation. Long-term orientation is the extent to which the society embraces the virtues oriented toward future rewards. A long-term orientation ranking indicates that the society prescribes to the values of sustained commitments, perseverance, and thrift. This is thought to support a strong work ethic in which long-term rewards are expected as a result of today’s hard work. A few of the countries with a long-term orientation are China, Japan, India, and the Netherlands. These countries include characteristics such as adaptation of traditions to the modern context, respect for tradition and obligation within limits, thrift (saving resources), perseverance toward slow results, willingness to subordinate oneself for a purpose, and concern with virtue. A short-term orientation is seen in those societies that expect and reward quick results, view leisure time as important, have little respect for old-time traditions, and reward the risk taking and adaptability required of entrepreneurs. A few of the societies with a short-term orientation include Canada, Czech Republic, Pakistan, Spain, Understanding Individual Differences and the United States. From a business perspective, several of the features of a strong short-term orientation include the following: The main work values are freedom, individual rights, achievement, • and thinking for oneself. • The focus is on the bottom line with an emphasis on the importance of this year’s profits. • Leaders and workers view themselves as highly distinct groups. • Personal loyalties vary with business needs (versus investment in lifelong personal networks).9 After reading this section and examining your Experiential Exercise scores on these five dimensions, some of you are probably questioning whether you have the ability to work in a foreign setting. We hope that we have given you some information about how key cultural differences can shape one’s personality. Understanding the role of culture can make you a better leader even if you never leave your home country. How do you believe that the culture of the United States impacted the development of Steve Jobs’ personality? Family 75 JUSTIN HORROCKS/ISTOCKPHOTO.COM Chapter 3 The primary vehicle for socializing an individual into a particular culture is the person’s immediate family. Both parents and siblings play important roles in the personality development of most individuals. Members of an extended family—grandparents, aunts, uncles, and cousins—also can influence personality formation. In particular, parents (or a single parent) influence their children’s development in three important ways: • Through their own behaviors, they present situations that bring out certain behaviors in children. • They serve as role models with which children often strongly identify. • They selectively reward and punish certain behaviors.10 The family’s situation also is an important source of personality differences. Situational influences include the family’s size, socioeconomic level, race, religion, and geographic location; birth order within the family; and parents’ educational level. A firstborn usually has the undivided parental attention for some time without siblings around. And because they identify with their parents, they tend to grow up more conservative and conscientious. Laterborns, in contrast, are often more conciliatory and open to new ideas and experiences. Also, a person raised in a poor family from China simply has different experiences and opportunities than does a person raised in a wealthy family. Children do not spend their waking hours trying to become more like their parents, but are also influenced by the culture in which they were raised. Cultural norms inform children what it takes to survive in that society. Group Membership The first group to which most individuals belong is the family. Individuals also participate in various groups during their lives, beginning with their childhood playmates and continuing through teenaged schoolmate groupings and sports teams to adult work and social groups. The numerous roles and experiences that individuals have as members of groups represent another important source of personality differences. Although playmates and school groups early in life may have the strongest influences on personality formation, social and group experiences in later life continue to influence and shape personality. Understanding someone’s personality requires understanding the groups to which that person belongs or has belonged in the past. ▲ Family is the primary vehicle for socializing an individual into a particular culture. 76 Part 2 The Individual in Organizations Life Experiences Each person’s life also is unique in terms of specific events and experiences, which can serve as important bases of personality. For example, the development of self-esteem (a personality dimension that we discuss shortly) depends on a series of experiences that include the opportunity to achieve goals and meet expectations, evidence of the ability to influence others, and a clear sense of being valued by others. A complex series of life experiences with others helps shape the adult’s level of self-esteem. As we weave an understanding of personality and other individual differences into our exploration of a variety of topics in organizational behavior, we hope that you will come to understand the crucial role that personality plays in explaining behavior. Individuals clearly pay a great deal of attention to the attributes of the personalities of the coworkers with whom they interact. The following Self Competency feature shows how JetBlue’s former CEO David Neeleman’s personality was shaped by various forces and how these affected his leadership at JetBlue.11 Self competency David Neeleman of JetBlue If you want to understand the culture of a company that is led by its founder, it helps to understand the personality of that founder. Neeleman spent the first five years of his life in Brazil where his father was a journalist. His family moved from Brazil, but he visited every summer. Brazil is a country that is divided between the haves and have-nots. He grew up in the rich part of the country and enjoyed a big house, a membership in country clubs, and so forth. During his junior year in Utah, he decided to return to Brazil to go on a mission for his church and ended up living in the slums or favelas of Brazil. The slums are where the desperately poor individuals live behind barbed wire fences in cardboard shacks. He was struck by a few things living in the slums. First, most wealthy individuals have a sense of entitlement. They thought that they were better than the individuals in the slums. This bothered him tremendously. Second, most of the poor individuals were happier than the rich individuals and they generously shared what little they had. He experienced enormous pleasures and satisfactions from working with these individuals. These experiences had a tremendous impact on the formation of his personality and his drive to manage JetBlue differently when he was CEO. When he traveled on a business trip, he flew coach class. There was no Lincoln Town Car waiting for him at the airport. At JetBlue, there are no reserved parking places. The coffee in the kitchen down the hall from his office was the same brand as that in the employee lounge at J. F. Kennedy airport. There is only one class on JetBlue planes. The seats at the back have slightly more legroom, so individuals who get off the plane last actually have roomier seats in-flight. The desk and other furniture in his office were the same as that used by everyone else. He told pilots: “There are individuals who make more money at this company than others, but that doesn’t mean they should flaunt it.” He was seen frequently on flights from Florida to New York City. Once the plane settled into its cruising altitude, Neeleman walked to the front of the cabin, grabbed the microphone, and introduced himself. He explained that he would be coming through the cabin serving drinks and snacks along with the crew. He took out the garbage when the flight was over just like the cabin attendants. It was his chance to speak directly to JetBlue’s customers. JetBlue also started a Crewmember Crisis fund when he was CEO. Everyone donated to it and it was used to help employees in crisis. If someone at JetBlue gets cancer, they have health benefits, but they might tap the fund to pay a babysitter while at chemotherapy. Employees and customers both continue to like the “touchy-feely” aspect of JetBlue. Chapter 3 “When you have a leader who’s so friendly, it makes everybody feel good about what they’re doing,” says Jim Small, a general manager for JetBlue in San Juan. JetBlue continues to be generous with travel vouchers when Understanding Individual Differences 77 passengers are inconvenienced. Neeleman himself once drove an elderly couple from JFK to Connecticut, where he lives and they were headed, rather then let them spend $200 on a taxi. To learn more about JetBlue, go to www.jetblue.com. Insights for Leaders Leaders should realize that their ability to change an individual’s personality is very limited and almost impossible. The idea that both nature and nurture interact to shape an individual’s personality is important. Heredity and the environment both play major roles in shaping personality. Also important is the fact that behavior is embedded in the way leaders think about subordinates. In an increasingly global market, leaders in every country must think globally. Global competition is a reality and the number of leaders and others who are taking assignments in countries other than their own is rapidly increasing. These workers bring aspects of their own cultures into their organizations, neighborhoods, school systems, and homes. Personality and Behavior You don’t see a person’s personality, instead you see behaviors that reflect these internal characteristics.12 For our purposes, personality describes a person’s most dominant characteristics—shy, sensitive, reliable, creative, and the like. This meaning of personality is useful to employees because it contains a profile of characteristics that tell employees about the behaviors they can expect from their leaders. This profile also serves as a guide for how we might communicate with a manager or fellow employee. The main reason that we are interested in individual personality in the study of organizational behavior is because of the link between personality and individuals’ competencies. Most individuals believe that there is a relationship between personality traits and behavior. Chet Cadieux, CEO of QuikTrip, a $4 billion privately held firm in Tulsa, Oklahoma, that operates more than 460 convenience stores in nine states, put all applicants through a personality assessment. He believes that extroverted salesclerks sell more than introverted ones and that extroverted clerks will like each other and stay longer in the job than introverts.13 The vast number and variety of specific personality traits or dimensions are bewildering. The term personality trait refers to the basic components of personality. Researchers of personality have identified literally thousands of traits over the years. Trait names simply represent the terms that individuals use to describe each other. However, a list containing hundreds or thousands of terms isn’t very useful either in understanding the profile of personality in a scientific sense or in describing individual differences in a practical sense. To be useful, these terms need to be organized into a small set of concepts or factors. Recent research has done just that, identifying several general factors that can be used to describe a personality.14 Before reading any further, please take time to complete the questionnaire in Table 3.1. Big Five Personality Factors The “Big Five” personality factors, as they often are referred to, describe an individual’s emotional stability, agreeableness, extraversion, conscientiousness, and openness.15 As shown in Figure 3.3, each includes a potentially large number and range of specific Learning Goal 2. Identify a set of personality dimensions that affect performance. 78 Part 2 The Individual in Organizations TABLE 3.1 Assessing Your Personality Using the Big Five The following questionnaire gives you a chance to gain insights into your Big Five personality dimensions. Please answer the following 25 statements using the following scale: 5 = Strongly agree 4 = Agree 3 = Moderate 2 = Disagree 1 = Strongly disagree STATEMENTS _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. I I I I I I I I I I I I I I I I I I I I I I I I I am the life of the party. sympathize with others’ feelings. get chores done right away. have frequent mood swings. have a vivid imagination. don’t talk a lot. (R) am not interested in other people’s problems. (R) often forget to put things back in their proper place. (R) am relaxed most of the time. (R) am not interested in abstract ideas. (R) talk to a lot of different people at parties. feel others’ emotions. like order. get upset easily. have difficulty understanding abstract ideas. (R) keep in the background. (R) am not really interested in others. (R) make a mess of things. (R) seldom feel blue. (R) do not have a good imagination. (R) don’t mind being the center of attention. make people feel at ease. pay attention to details. am easily disturbed. (R) am full of ideas. SCORING NOTE: If a statement has an “(R)” at the end of it, the scoring for that statement is reversed. That is, strongly agree is worth 1 point, agree is worth 2 points, etc. 1. Add your score for statements 1, 6,11,16, and 21: _________. This is your score for extraversion. The higher the score, the more likely you are to be energetic, outgoing, and gregarious. 2. Add your score for statements 2, 7,12,17, and 22: _________. This is your score for agreeableness. The higher the score, the more warm, tactful, and considerate you are toward others. 3. Add your score for statements 3,8,13,18, and 23: _________. This is your score for conscientiousness. The higher the score, the more careful, neat, and dependable you are likely to be. 4. Add your score for statements 4,9,14,19, and 24: _________. This is your score for emotional stability. The higher the score, the more stable, confident, and effective you are likely to be. 5. Add your score for statements 5,10,15,20, and 25: _________. This is your score for openness. The higher the score, the more imaginative, curious, and original you are likely to be. traits. That is, each factor is both a collection of related traits and on a continuum as shown in Figure 3.3. Researchers have investigated extensively the relationships between the Big Five personality factors and performance. Their findings indicate that employees who Chapter 3 Understanding Individual Differences FIGURE 3. 3 The Big Five Personality Factors Emotional Stability (Stable, confident, effective) (Nervous, self-doubting, moody) Agreeableness (Warm, tactful, considerate) (Independent, cold, rude) Extraversion (Gregarious, energetic, self-dramatizing) (Shy, unassertive, withdrawn) Conscientiousness (Careful, neat, dependable) (Impulsive, careless, irresponsible) Openness (Imaginative, curious, original) (Dull, unimaginative, literal-minded) have emotional stability, agreeableness, and conscientiousness perform better than those who lack these (the extremes of the conscientiousness continuum in Figure 3.3). An individual with a personality at one extreme of the agreeableness factor continuum might be described as warm and considerate. But with a personality at this factor’s other extreme, the person would be considered cold or rude. Let’s define the terms used for the Big Five personality factors and relate these to Steve Jobs. Emotional stability is the degree to which a person is calm, secure, and free from persistent negative feelings. Individuals who are emotionally stable are relaxed, poised, slow to show anger, handle crises well, resilient, and secure in their interpersonal dealings with others. Individuals with less emotional stability are more excitable, insecure in their dealings with others, reactive, and subject to extreme swings of moods. Teams composed of emotionally unstable individuals usually come up with relatively fewer creative ideas than teams composed of emotionally stable individuals. Individuals with emotional stability handle the stress of managing others better than those who are less emotionally stable. How would you rate Steve Jobs’ emotional stability? Agreeableness is a person’s ability to get along with others. Agreeable individuals value getting along with others. They are considerate, friendly, helpful, and willing to compromise their interests. Agreeable individuals also have an optimistic view of 79 80 Part 2 The Individual in Organizations human nature. They believe individuals are basically honest, decent, and trustworthy. Individuals who demonstrate low agreeableness are often described as short tempered, uncooperative, and irritable. They are generally unconcerned with others’ well-being and are unlikely to extend themselves for other individuals. Highly agreeable individuals are better at developing and maintaining close relationships with others at work, whereas less agreeable individuals are not likely to have particularly close working relationships with others, including customers and suppliers. How would you rate Steve Jobs on the agreeableness dimension? Extraversion is the degree to which a person seeks the company of others. Extraverts enjoy being with individuals, are full of energy, and often experience positive emotions. Sociable individuals are extraverts. Extraverts are comfortable talking with others, speak up in a group, and are assertive, talkative, and open to establishing new interpersonal relationships. Less sociable individuals are labeled introverts. They tend to be low key, quiet, and deliberate. Their lack of social involvement should not be interpreted as shyness; the introvert simply needs less stimulation and more time alone to recharge his batteries. Research has shown that sociable individuals tend to be higher performing individuals than those who are less sociable. These individuals are also more likely to be attracted to managerial positions that require good interpersonal skills, such as marketing, sales, and senior management positions. How would you rate Steve Jobs on the extraversion dimension? Conscientiousness is concerned with self-discipline, acting responsibly, and directing our behavior. Individuals who focus on a few key goals are more likely to be organized, reliable, careful, thorough, responsible, and self-disciplined because they concentrate on doing a few things well. Individuals who are less conscientious tend to focus on a wider array of goals and, as a result, tend to be more disorganized and less thorough. Researchers have found that more conscientious individuals tend to be higher performers than less conscientious individuals, especially in sales. How would you rate Steve Jobs on this dimension? Openness describes imagination and creativity. Individuals with high levels of openness are willing to listen to new ideas, have vivid imaginations, appreciate art and beauty, prefer variety to routine, and change their own ideas, beliefs, and assumptions in response to new information. Open individuals tend to have a broad range of interests and be creative. On the other hand, individuals who demonstrate low openness tend to be less receptive to new ideas and less willing to change their minds. They prefer the plain, straightforward, and obvious over the complex, ambiguous, and subtle. Leaders who are high on openness tend to be better performers because of their ability to adapt to new situations and their willingness to listen to others who have different points of view. How would you rate Steve Jobs on openness? Insights for Leaders We must caution you that before a link can be established between job performance and any personality measure, it must satisfy two concerns. One is that the measure must be reliable. Reliability refers to how consistently a measure gets the same results. If you get on a scale and its reads 188 pounds, step off and then on again and the scale reads 170, it is not reliable. For a measure to be reliable, it must be consistent. Second, a scale must be valid. Validity refers to how important the measure is to other things that are important, such as job performance. Many of you took the ACT or SAT test prior to applying for college. Many admissions individuals believe that your test score is a valid measure of your past achievements and your capacity to compete academically at their institution. Although each personality factor represents a collection of related traits, the link between personality and specific behaviors often is most valid when the focus is on a single factor rather than all five factors at once. Organizations are using the Big Five Chapter 3 Understanding Individual Differences as an assessment device for screening new employees as part of their interviewing process. Nordstrom’s requires sales individuals to be cheerful, energetic, and serve very demanding customers with a smile. Therefore, individuals are required to show extraversion, agreeableness, and emotional stability. Nordstrom’s human resource managers have found that these are valid measures leading to high performance for its sales staff. At Outback Steakhouse, the turnover of employees varies between 40 and 60 percent a year. Using the Big Five inventory, Outback managers found that by recruiting employees who were extraverted and agreeable, they were able to cut down on turnover and increase customers’ satisfaction with their dining experiences. Similarly, Outsourcing Solutions, a debt collection firm, found that those employees high in conscientiousness and introversion were able to sit for hours by themselves to make calls regarding past-due accounts and stayed with the organization longer than those employees who did not demonstrate these traits. New Horizons Computer Learning Centers also faced high turnover until it discovered that those employees who were high in conscientiousness and extraversion made the best employees for them.16 Some individuals question these findings noting that one’s personality traits can undergo change. We recognize that one’s personality can evolve over time as a person becomes exposed to new experiences and situations. Graduating from college, breaking away from one’s parents, starting a career, getting married, raising children, and being managed by various “bosses” can all shape the development of an individual’s personality. Also by examining our own behavior, we may learn to behave differently from situation to situation. Have you ever noticed how your behavior at a Super Bowl party is different than your behavior at work? Self-Esteem Self-esteem is the extent to which an individual believes that he or she is a worthwhile and deserving individual. In other words, individuals develop, hold, and sometimes modify opinions of their own behaviors, abilities, appearance, and worth. These general self-assessments reflect responses to individuals and situations, successes and failures, and the opinions of others. Such self-evaluations are sufficiently accurate and stable to be widely regarded as a basic personality dimension. In terms of the Big Five personality, self-esteem most likely would be part of the emotional stability dimension (see Figure 3.3). Self-esteem affects behavior in organizations and other social settings in several important ways. It influences initial vocational choice. For example, individuals with high self-esteem are more likely to take risks in job selection, to seek out high-status occupations (e.g., medicine or law), and to choose unconventional or nontraditional jobs (e.g., forest ranger or jet pilot) than are individuals with low self-esteem. A study of college students looking for jobs reported that those with high self-esteem (1) received more favorable evaluations from recruiters, (2) were more satisfied with the job search, (3) received more job offers, and (4) were more likely to accept jobs before graduation than were students with low self-esteem.17 Self-esteem influences numerous behaviors. Employees with low self-esteem are more easily swayed by the opinions of coworkers than are employees with high selfesteem. Employees with low self-esteem set lower goals for themselves than do those with high self-esteem. Employees with high self-esteem place more value on actually attaining their goals than do those with low self-esteem. That is, high self-esteem individuals break down jobs into specific tasks and prioritize their work so they can accomplish their jobs. Employees with low self-esteem are more susceptible than employees with high self-esteem to procrastinate, suffer stress, conflict, ambiguity, poor supervision, poor working conditions, and the like. In brief, high self-esteem is positively related to achievement and a willingness to expend effort to accomplish goals. Clearly, 81 82 Part 2 The Individual in Organizations self-esteem is an important individual difference in terms of work behavior. Both Steve Jobs and David Neeleman appear to be individuals with high self-esteem. Locus of Control Locus of control is the degree to which individuals believe that they can control events affecting them.18 Individuals who have a high internal locus of control (internals) believe that their own behavior and actions primarily, but not necessarily totally, determine many of the events in their lives. On the other hand, individuals who have a high external locus of control (externals) believe that chance, fate, or other individuals primarily determine what happens to them. Locus of control typically is considered to be a part of the conscientiousness factor (see Figure 3.3). Table 3.2 contains a measure that you can use to assess your own locus of control beliefs. What is your locus of control? Many differences between internals and externals are significant in explaining aspects of behavior in organizations and other social settings.19 Internals control their own behavior better, are more active politically and socially, and seek information about their situations more actively than do externals. Compared to externals, internals are more likely to try to influence or persuade others and are less likely to be influenced by others. Internals often are more achievement oriented than are externals. Compared to internals, externals appear to prefer a more structured, directive style of supervision. As we pointed out in Chapter 1, the ability to perform effectively in the global environment is increasingly important. Individuals with a high internal locus of control often adjust more readily to international assignments than do those with a high external locus of control. What do you think Steve Jobs’ locus of control score is? Figure 3.4 shows some of the important relationships between locus of control and job performance. TABLE 3.2 A Locus of Control Measure For each of these 10 questions, indicate the extent to which you agree or disagree, using the following scale. 1 2 3 4 = = = = strongly disagree disagree slightly disagree neither disagree nor agree ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 5 = slightly agree 6 = agree 7 = strongly agree When I get what I want it’s usually because I worked hard for it. When I make plans I am almost certain to make them work. I prefer games involving some luck over games requiring pure skill. I can learn almost anything if I set my mind to it. My major accomplishments are entirely due to my hard work and ability. I usually don’t set goals, because I have a hard time following through on them. Competition discourages excellence. Often people get ahead just by being lucky. On any sort of exam or competition I like to know how well I do relative to everyone else. It’s pointless to keep working on something that’s too difficult for me. To determine your score, reverse the values you selected for questions 3, 6, 7, 8, and 10 (1 = 7, 2 = 6, 3 = 5, 4 = 4, 5 = 3, 6 = 2, 7 = 1). For example, if you strongly disagreed with the statement in question 3, you would have given it a value of “1.” Change this value to a “7.” Reverse the scores in a similar manner for questions 6, 7, 8, and 10. Now add the 10 point values together. Your score: _______ A study of college students found a mean of 51.8 for men and 52.2 for women using this questionnaire. The higher your score, the higher your internal locus of control. Low scores are associated with external locus of control. Source: Adapted from Burger, J. M. Personality: Theory and Research. Belmont, Calif.: Wadsworth, 1986, pp. 400–401. Chapter 3 Understanding Individual Differences FIGURE 3.4 The Effects of Locus of Control on Performance CONDITIONS PERFORMANCE Information Processing The work requires complex information processing and complex learning Internals perform better The work is quite simple and easy to learn Internals perform no better than externals Initiative The work requires initiative and independent action Internals perform better The work requires compliance and conformity Externals perform better Motivation The work requires high motivation and provides valued rewards in return for greater effort; incentive pay for greater productivity The work does not require great effort and contingent rewards are lacking; hourly pay rates determined by collective bargaining Internals perform better Externals perform at least as well as internals Source: From J. B. Miner, Industrial-Organizational Psychology. McGraw-Hill, 1992, 151. Emotional Intelligence Psychologist Daniel Goleman contends that emotional intelligence (EQ) is actually more crucial than general intelligence (IQ) in terms of career success.20 Emotional intelligence refers to how well an individual handles oneself and others rather than how smart or how capable the individual is in terms of technical skills. Goleman suggests that leaders need a high EQ to be effective in their leadership positions. A high EQ enables a leader to accurately assess their subordinates’ needs, analyze the situation, and then suggest the proper course of action. The leader processes this information to tailor her behaviors to fit the situation. To assess your emotional intelligence, turn to the second Experiential Exercise at the end of this chapter on page 99 and complete the questionnaire. Emotional intelligence includes the attributes of self-awareness, social empathy, self-motivation, and social skills: Self-awareness refers to recognizing one’s emotions, strengths and limitations, and • capabilities and how these affect others. Individuals with high self-awareness know their emotional state, recognize the links between their feelings and what they are thinking, are open to feedback from others on how to continuously improve, and are able to make sound decisions despite uncertainties and pressures. They are able to show a sense of humor. • Social empathy refers to sensing what others need in order for them to develop. Individuals who are socially aware of themselves show sensitivity, understand other individuals’ needs and feelings, challenge bias and intolerance, and act as trusted advisers to others. They are good at acknowledging an individual’s strengths, accomplishments, and development. As a mentor, they give timely coaching advice and offer assignments that challenge a person’s competencies. 83 Part 2 The Individual in Organizations Self-motivation refers to being results oriented and pursuing goals beyond what is required. Highly self-motivated individuals set challenging goals for themselves and others, seek ways to improve their performance, and readily make personal sacrifices to meet the organization’s goals. They operate from hope of success rather than a fear of failure. Social skills refer to the ability of an individual to influence others. Individuals with effec• tive social skills are good at persuading others to share their vision; stepping forward as a leader, regardless of their position in the organization; leading by example; and dealing with difficult interpersonal situations in a straightforward manner. Think of EQ as being the social equivalent of IQ. At GM, Ford, AT&T, and other organizations undergoing rapid change, emotional intelligence may determine who gets promoted and who gets passed over or who gets laid off and who stays. Studies have consistently shown, for example, that the attributes associated with emotional intelligence (e.g., the ability to persuade others, the ability to understand others, and so on) are twice as important for career success as intelligence (IQ) or technical competencies.21 Using all the dimensions of EQ, evaluate Steve Jobs’ EQ. What aspects of Jobs’ personality seem to be most important in influencing his behavior(s)? Why was he so successful at Apple? By any measure, Starbucks is among the most successful retailing companies in the world. While much has been written about Starbucks’ successes and challenges during the worldwide recession, the role of the barista’s personality is critical because he or she is the person who talks to the customers and serves them. In the following Teams Competency feature, we have put brackets around the personality characteristics so you can identify them as you read.22 • Teams competency Why Personality Is Important at Starbucks TED S. WARREN/AP PHOTO 84 Starbucks’ baristas are important for store success. Enter any Starbucks and you’ll see baristas (the associates who take orders and make and serve coffee and food) at work. They work like a well-oiled machine with all moves well choreographed to serve the customer. These baristas work together as a team and are important for the store’s success. How does Starbucks train them to work together as a team? All baristas receive 24 hours of in-store training in customer service (how to meet, greet, and serve customers) and basic retail skills. They also take “Coffee Knowledge” and “Brewing the Perfect Cup” classes. Baristas are taught to anticipate the customer’s needs, and to make eye contact while carefully explaining the various flavors and blends. They are also trained in the care and maintenance of the machinery and how to treat each other. One of the guiding principles at Starbucks is to provide a great working environment and to employ individuals who treat each other with high respect and dignity (emotional stability). Chapter 3 A company survey found the top two reasons individuals want to work for Starbucks are “the opportunity to work with an enthusiastic team” and “to work in a place where I feel I have value” (agreeableness). Therefore, Starbucks looks to hire individuals with high self-esteem who are sensitive to the feelings of others and who want participation from and success for all team members. Understanding Individual Differences 85 Highly effective baristas are also stable individuals who do not show anxiousness or hostility to others even under stressful conditions. Finally, Starbucks wants barista partners who combine their passion for great coffee and quality customer service, listen to others, are reliable, organized, and can focus on completing their tasks. To learn more about Starbucks, go to www.starbucks.com. Insights for Leaders It should be evident by now that the various personality dimensions have important implications for understanding behavior and improving performance. However, leaders or groups should not try to change or otherwise directly control employee personality because being able to do so is generally impossible. Even if such control were possible, it would be highly unethical. Rather, the challenge for leaders and employees is to understand the crucial role played by personality in explaining some aspects of human behavior in the workplace. Knowledge of important individual differences provides leaders, employees, and students of organizational behavior with valuable insights and a framework that they can use to diagnose events and situations. Although understanding differences in personality is important, behavior always involves an interaction of the person and the situation. Sometimes the demands of the situation may be so overwhelming that individual differences are relatively unimportant for leaders. For example, if an office building is burning, everyone in it will try to flee. However, the fact that all employees behaved the same way says nothing about the personalities of those individuals. In other situations, individual differences may explain more about behavior. Under normal working conditions, a person’s personality has a role in determining how that person behaves at work. Just reflect on how Steve Jobs’ personality affects others at Apple, or the characteristics of baristas that Starbucks looks for when hiring new employees. We believe that considering both the personality of the individual and the demands of the job are needed to help leaders understand why individuals behave as they do in organizations. When an individual’s personality does not fit the demands of the job, that person will be less satisfied and productive. Job applicants should assess the fit between their personal characteristics and the demands of the job and organization. However, if all individuals share common characteristics and preferences, leaders need to recognize that the organization might be more resistant to change. To remain competitive over the long term, leaders are probably well served to hire some individuals who do not fit the mold. For that reason, this perspective is consistently used throughout this book. Many of the topics covered in this book, such as leadership, interpersonal communication, conflict management, stress, and resistance to change, examine both personal and situational causes for the organizational behavior discussed. Both interact to determine behavior. Work-Related Attitudes It is often very difficult to separate personality and attitudes. You cannot see either one, but you can see the results of each through a person’s behavior. Attitudes are another type of individual difference that affects an individual’s behavior in organizations. Attitudes are relatively lasting feelings, thoughts, and behaviors aimed at specific Learning Goal 3. Describe the attitudes that affect performance. 86 Part 2 The Individual in Organizations individuals, groups, ideas, issues, or objects.23 Attitudes are influenced by an individual’s background and experiences. They are formed by a variety of forces, including their personal values, experiences, and personalities. Attitudes are important for three reasons. First, attitudes are reasonably stable over time. Unless individuals have strong reasons to change, they will persist. Individuals who have a favorable attitude toward buying domestic cars will probably like domestic cars in the future, unless important reasons occur to change their automobile preferences. Second, individuals hold attitudes that are directed toward some object—job, supervisor, company, college. If a barista likes coffee and serving individuals, they probably won’t have a negative attitude toward working at Starbucks as a barista. Third, attitudes influence our behavior. That is, individuals tend to behave in ways that are consistent with their feelings. If we have a specific attitude toward an object or person, we tend to form other consistent attitudes toward related objects or individuals. Therefore, to change a person’s attitude, you need to change a person’s behavior. Components of Attitudes Individuals often think of attitudes as a simple concept. In reality, attitudes and their effects on behavior are complex. An attitude consists of: • an affective component—the feelings, sentiments, moods, and emotions about some specific person, idea, event, or object; • a cognitive component—the thoughts, opinions, knowledge, or information held by the individual about a specific person, idea, event, or object; and • a behavioral component—the predisposition to act on a favorable or unfavorable evaluation to a specific person, idea, event, or object. These components don’t exist or function separately. An attitude represents the interplay of a person’s affective, cognitive, and behavioral tendencies with regard to something—another person or group, an event, or an issue. For example, suppose that a college student has a negative attitude about the use of tobacco. During a job interview with the representative of the Altria Group, he discovers that Philip Morris, a maker of cigarettes, is owned by the Altria Group. He might feel a Diversity Insight sudden uneasiness during the interview (the affective compoIndividuals working together and respectnent) because a close friend’s parent recently died from lung ing one another so that they can achieve cancer. He might form a negative opinion of the interviewer their common goal is all I want. We need based on beliefs and opinions about the type of person who all sorts of individuals to succeed as an would work for such a company (the cognitive component). organization. He might even be tempted to make an unkind remark to the interviewer or suddenly terminate the interview (the behavAlbert Black, CEO, On-Target Supplies and Logistics ioral component). However, the person’s actual behavior may or may not be easy to predict and will depend on several factors, including the current state of the job market, that we will discuss shortly. Attitudes Affecting Job Performance Individuals form attitudes about many things. Employees have attitudes about their manager, pay, working conditions, promotions, where they park, coworkers, and the like. Some of these attitudes are more important than others because they are more closely linked to performance. Especially important to job performance are attitudes of hope, job satisfaction, and organizational commitment. Chapter 3 Understanding Individual Differences Hope Hope involves a person’s mental willpower (determination) and waypower (road map) to achieve goals.24 Simply wishing for something isn’t enough; a person must have the means to make it happen. However, all the knowledge and skills needed to solve a problem won’t help if the person doesn’t have the willpower to do so. Therefore, a simple definition of hope is Hope = mental willpower + waypower to achieve goals. Answering the questions in Table 3.3 will help you understand this definition of hope. You need to have a high level of both the willpower and the waypower to have a high level of hope to accomplish your goals. This concept applies to a variety of workrelated attitudes. The high-hope person enjoys the pursuit of challenging goals and pursues them with a positive attitude. High-hope individuals engage in self-talk, such as “This should be an interesting task” or “I am ready for this challenge.” High-hope individuals are attentive and focused on the appropriate behaviors for the situation. They commit themselves to desired positive work outcomes (e.g., good performance) and distance themselves from negative outcomes. They possess an internal locus of control. As such, they need a high degree of autonomy in order to express themselves and be productive. They can be easily offended and discouraged if micromanaged and will likely try to search for alternative pathways to regain control. Hopeful employees tend to be creative and resourceful. In contrast, low-hope individuals are apprehensive about what is to come. Their attention is quickly diverted from task-relevant behavior to such thoughts as “I’m not doing very well.” Low-hope individuals may feel a lot of negative emotions very quickly. Low-hope individuals are especially susceptible to feeling great amounts of stress in their jobs and becoming easily derailed by issues in their pursuit of goals. With such derailments, low-hope individuals perceive that they are not going to reach their desired goals. Their natural tendency is to withdraw from friends and become “loners.” For high-hope individuals, however, the stressor is TABLE 3. 3 Hope Scale Read each item carefully. For each item, what number best describes you? 1 2 3 4 = = = = definitely false mostly false mostly true definitely true ______ ______ ______ ______ ______ ______ ______ ______ 1. 2. 3. 4. 5. 6. 7. 8. I energetically pursue my work (academic) goals. I can think of many ways to get out of a jam. My past experiences have prepared me well for my future. There are lots of ways around any problem. I’ve been pretty successful in life. I can think of many ways to get things in life that are most important to me. I meet the goals (work/academic) that I set for myself. Even when others get discouraged, I know I can find a way to solve the problem. Scoring: Total the eight numbers. If you score higher than 24, you are a hopeful person. If you score less than 24, you probably aren’t hopeful. Items 1, 3, 5, and 7 relate to will power, and items 2, 4, 6, and 8 relate to waypower. Source: Adapted from Snyder, C. R. Managing for high hope. R&D Innovator, 1995,4(6), 6 –7; Snyder, C. R., LaPointe, A. B., Crowson, J. J., and Early, S. Preferences of high- and low-hope people for self-referential input. Cognition and Emotion, 1998, 12, 807–823. 87 88 Part 2 The Individual in Organizations seen as a challenge that needs to be worked around. What happens when high-hope individuals are blocked from reaching their goal? They are not filled with anger, self-pity, and negative emotions, as is the case for low-hope individuals in similar circumstances. Rather, high-hope individuals will find another goal that will fulfill similar needs. This is because high-hope individuals have several goals that can bring them happiness. Leaders who are hopeful spend more time with employees, establish open lines of communication with employees and others, and help others set difficult, but achievable, goals. High-hope individuals tend to be more certain of their goals, value progress toward achieving those goals, enjoy interacting with individuals, readily adapt to new relationships, and are less anxious in stressful situations than are low-hope individuals. Leaders can help employees increase their level of hope by using one or more of the following management practices.25 First, they can help subordinates set clear and specific goals that have benchmarks so that the employees can track progress toward their goals. Vague goals may actually lessen hope because the result sought is unclear and tracking progress is therefore difficult, if not impossible. Employees who set performance goals that are slightly higher than previous levels of performance learn to expand their range of hope. They also learn a great deal about which goals are best for them. Second, leaders can help employees break overall, long-term goals into small subgoals or steps. Remember how you learned to ride a bike? Through many falls and wobbles, you learned that each consecutive subgoal (moving the pedals, balancing, going a block without falling) is a stretch. These small steps provided you with positive mental maps about how to reach your goal—riding a bike. Third, leaders can help employees figure out how to motivate themselves to reach their goals. Job Satisfaction An attitude of great interest to managers and team leaders is job satisfaction.26 Job satisfaction reflects the extent to which individuals find fulfillment in their work. Job satisfaction has been linked to employees staying on the job and low job turnover. With the cost of replacing employees being about 30 to 40 percent of their salary, job turnover can become quite expensive. Similarly, employees who are highly satisfied with their jobs come to work regularly and are less likely to take sick days. Do employees generally like their jobs? Despite what you may hear in the news about dissatisfied employees going on strike or even acting violently toward their coworkers and/or managers, they are generally quite satisfied with their jobs. Low job satisfaction can result in costly turnover, absenteeism, tardiness, and even poor mental health. Because job satisfaction is important to organizations, we need to look at the factors that contribute to it. A popular measure of job satisfaction used by organizations is shown in Table 3.4. It measures five facets of job satisfaction: pay, security, social, supervisory, and growth satisfaction. Take time now to complete it. Obviously, you may be satisfied with some aspects of your job and, at the same time, dissatisfied with others. The sources of job satisfaction and dissatisfaction vary from person to person. Some individuals may find that being an animal control officer, mortician, correctional/probation officer, or a used car salesperson might not offer sources of personal satisfaction. Yet, individuals who perform these jobs often think that they are performing important jobs and derive a great sense of job satisfaction from performing them. Important sources of satisfaction for many employees include the challenge of the job, the interest that the work holds for them, the physical activity required, working conditions, rewards available from the organization, the nature of coworkers, and the like. Table 3.5 lists work factors that often are related to various levels of job satisfaction. An important implication is that job satisfaction be should considered an outcome of an individual’s work experience. Thus, high levels of dissatisfaction should indicate to leaders that problems exist, say, with working conditions, the reward system, or the employee’s role in the organization. Chapter 3 Understanding Individual Differences TABLE 3.4 Measuring Job Satisfaction Think of the job you have now, or a job you’ve had in the past. Indicate how satisfied you are with each aspect of your job below, using the following scale: 1 2 3 4 5 6 7 = = = = = = = Extremely dissatisfied Dissatisfied Slightly dissatisfied Neutral Slightly satisfied Satisfied Extremely satisfied _____ 1. The amount of job security I have. _____ 2. The amount of pay and fringe benefits I receive. _____ 3. The amount of personal growth and development I get in doing my job. _____ 4. The people I talk to and work with on my job. _____ 5. The degree of respect and fair treatment I receive from my boss. _____ 6. The feeling of worthwhile accomplishment I get from doing my job. _____ 7. The chance to get to know other people while on the job. _____ 8. The amount of support and guidance I receive from my supervisor. _____ 9. The degree to which I am fairly paid for what I contribute to this organization. _____ 10. The amount of independent thought and action I can exercise in my job. _____ 11. How secure things look for me in the future in this organization. _____ 12. The chance to help other people while at work. _____ 13. The amount of challenge in my job. _____ 14. The overall quality of the supervision I receive on my work. Now, compute your scores for the facets of job satisfaction. Pay Satisfaction: Q2 + Q9 = _____ Divided by 2: Security Satisfaction: Q1 + Q11 = _____ Divided by 2: Social Satisfaction: Q4 + Q7 + Q12 = _____ Divided by 3: Supervisory Satisfaction: Q5 + Q8 + Q14 = _____ Divided by 3: Growth Satisfaction: Q3 + Q6 + Q10 + Q13 = _____ Divided by 4: Scores on the facets range from 1 to 7. (Scores lower than 4 suggest there is room for change.) This questionnaire is an abbreviated version of the Job Diagnostic Survey, a widely used tool for assessing individuals’ attitudes about their jobs. Source: J. Richard Hackman & Greg R. Oldham, Work Redesign, © 1980. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ. A commonsense notion is that job satisfaction leads directly to effective performance. (A happy worker is a good worker.) Yet, numerous studies have shown that a simple, direct link between job satisfaction and job performance often doesn’t exist.27 Research has shown that job satisfaction and job performance are influenced by one’s personality. That is, a person’s locus of control and Big Five personality characteristics affect the relationship between job satisfaction and job performance. The difficulty of relating attitudes to behavior is important. For example, individuals who hold a positive attitude toward their job but are low in conscientiousness may not necessarily work harder because they end up coming in late to work, fail to show up at all, are unorganized, and the like. General attitudes best predict general behaviors, and specific attitudes are related most strongly to specific behaviors. These principles explain, 89 90 Part 2 The Individual in Organizations TABLE 3. 5 Effects of Various Work Factors on Job Satisfaction WORK FACTORS EFFECTS Work itself Challenge Mentally challenging work that the individual can successfully accomplish is satisfying. Physical demands Tiring work is dissatisfying. Personal interest Personally interesting work is satisfying. Reward structure Rewards that are equitable and that provide accurate feedback for performance are satisfying. Working conditions Physical Satisfaction depends on the match between working conditions and physical needs. Goal attainment Working conditions that promote goal attainment are satisfying. Self High self-esteem is conducive to job satisfaction. Others in the organization Individuals will be satisfied with supervisors, coworkers, or subordinates who help them attain rewards. Also, individuals will be more satisfied with colleagues who see things the same way they do. Organization and management Individuals will be satisfied with organizations that have policies and procedures designed to help them attain rewards. Individuals will be dissatisfied with conflicting roles and/or ambiguous roles imposed by the organization. Fringe benefits Benefits do not have a strong influence on job satisfaction for most workers. Source: Adapted from Landy, F. J. Psychology of Work Behavior, 4th ed. Pacific Grove, Calif.: Brooks/Cole, 1989, 470. at least in part, why the expected relationships often don’t exist. Job satisfaction is a collection of numerous attitudes toward various aspects of the job and represents a general attitude. Performance of a specific task, such as preparing a particular monthly report, can’t necessarily be predicted on the basis of a general attitude. However, studies have shown that the level of overall workforce job satisfaction and organizational performance are linked. That is, organizations with satisfied employees tend to be more effective than organizations with unsatisfied employees. Mercedes-Benz leaders learned how to create a high-performing and satisfied workforce when it developed its M-Class SUV built in Vance, Alabama. Experts from around the globe met with the leadership of Mercedes-Benz to offer them advice on how to create this new factory. The following Across Cultures Competency feature describes how Mercedes-Benz designed the Alabama factory to let workers derive a sense of high job satisfaction from working in this plant.28 Across Cultures competency Mercedes-Benz Mercedes-Benz is one of the world’s most widely recognized brands. It represents quality and luxury. In Germany, engineers are highly trained experts who develop their skills by working as an apprentice to a Meister (master in the profession). Workers accept the authority of the Meister and don’t expect to be treated as equals to the Meister. Once they learn the skills they need, Chapter 3 them. The workers made a change, and that change saved 2 seconds off the line for all SUVs. All workers are looking for small changes that will make their job more satisfying. According to George Jones, a 38-year-old who inspects raw materials at the plant, “job satisfaction is all about having a voice in what goes on.” VARIO IMAGES GMBH & CO.KG/ALAMY they expect to carry out their tasks without close supervision. This is a sign that they are respected and can be trusted to do a good job. Strong norms exist concerning the importance of producing cars and SUVs of superior quality. In many U.S. automobile plants, managers control workers through a division of labor and narrow spans of control. Henry Ford’s assembly-line approach to motivating workers still dominates many production plants. Employees are driven to get their job done. Leaders are not concerned with employees deriving much job satisfaction. When the Vance plant was built, German engineers spent two years helping to train Americans to perform their work as part of multidisciplinary teams. Each team was autonomous and managed its particular operations. The teams are accountable for meeting quality standards, controlling costs, and meeting production schedules. When Jack Duncan, a supervisor, noticed that workers had to “slant walk” zigzag style to reach parts in a bin, he called the workers together to find a better arrangement for Understanding Individual Differences At Mercedes-Benz, teams are accountable for meeting quality standards. To learn more about Mercedes-Benz, go to www.mercedesbenz.com. Take a look at the various work factors in Table 3.5. How many can you identify in the Mercedes-Benz example? How do these contribute to employee job satisfaction? Organizational Commitment Organizational commitment influences whether a person stays on the job. Organizational commitment is the strength of an employee’s involvement in the organization and identification with it.29 Employees who stay with their organization for a long period of time tend to be more committed to the organization than those who work for shorter periods of time. For long-time employees, the thought of packing up and moving on is not taken lightly. Strong organizational commitment is characterized by: • a support of and acceptance of the organization’s goals and values, • a willingness to exert considerable effort on behalf of the organization, and • a desire to remain with the organization.30 Highly committed employees will probably see themselves as dedicated members of the organization, referring to the organization in personal terms, such as “We make high-quality products.” They will overlook minor sources of job dissatisfaction. In contrast, less committed employees often view their relationship with the organization in less personal terms (“They don’t offer quality service”), will express their dissatisfaction more openly about things, and will have a short tenure with the organization. Organizational commitment goes beyond loyalty to include an active contribution to accomplishing organizational goals. Organizational commitment represents a broader work-related attitude than job satisfaction. It applies to the entire organization 91 92 Part 2 The Individual in Organizations rather than just to the job. Further, commitment typically is more stable than satisfaction because day-to-day events are less likely to change commitment. As with job satisfaction, the sources of organizational commitment may vary from person to person. Employees’ initial commitment to an organization is determined largely by their individual characteristics (e.g., cultural values, personality, attitudes) and how well their early job experiences match their expectations. If you have ever visited Seattle’s Pike Place Fish Market, you probably saw John Yokoyama. John encourages employees to work hard, have fun, be kind, and develop positive attitudes. Tossing the fish and joking with customers, practices that may not work at Exxon, seem to work at Yokoyama’s fish market. Organizational commitment continues to be influenced by job experiences, with many of the same factors that lead to job satisfaction also contributing to organizational commitment or lack of commitment: pay, relationships with supervisors and coworkers, working conditions, opportunities for advancement, and so on. How would you describe workers’ job commitment in the Mercedes-Benz plant in Vance, Alabama? Over time, organizational commitment tends to become stronger because (1) individuals develop deeper ties to the organization and their coworkers as they spend more time with them, (2) seniority often brings advantages that tend to develop more positive work attitudes, and (3) opportunities in the job market may decrease with age, causing employees to become more strongly attached to their current organization. A highly committed organization is one in which everyone feels equally committed to the organization’s goals. Members of majority and minority groups feel respected; everyone has an equal chance to express views and influence decisions; and everyone has equal access to both formal and informal networks within the organization. Scott McQuillan describes how Deloitte & Touche earns its employee commitment in the following Diversity Competency feature.31 Diversity competency Deloitte & Touche At the accounting firm of Deloitte & Touche, employment numbers alerted partners to a disturbing trend. Only about 5 percent of the firm’s partners were women, and the turnover rate for women throughout the firm was 30 percent. When Diana O’Brien left Deloitte & Touche to work for another firm, she was just one of the many women who did so. Subsequently, partners at the firm realized that they needed to change their diversity policy. The changes they made were so successful that Diana O’Brien decided to return. “Before I left, I couldn’t have a life and still do consulting. Now, enough has changed that I have been able to do that,” she explained. One of the most significant changes was the company’s flexible work arrangements, which includes compressed workweeks, telecommuting, To learn about Deloitte & Touche, go to www.deloitte.com. job sharing, and paid child-care leave. For Jeff McLane, the changes made it possible for him to have a more balanced personal life, which included time to train for competing as an Olympic cyclist. For Scott McQuillan, the firm’s diversity and inclusion program helped him win the war for talent at college campuses. Getting the message out that the firm wanted applicants to be able to balance work and family was critical for McQuillan’s college recruiting program success. The firm was also committed to hiring college seniors with different backgrounds. McQuillan started to recruit earlier and attend conferences sponsored by the National Association of Black, Hispanic and Latino Accountants. Such tactics helped the firm bring in a variety of diverse individuals. Chapter 3 Understanding Individual Differences Emotions at Work Anger, jealousy, guilt, shame, happiness, and relief are all feelings that you have probably experienced in organizations. These feelings are all part of your emotions. Emotions are the complex patterns of feelings toward an object or person. We have all seen how emotions affect workplace attitudes and behaviors. When performing your job, you experience a variety of emotions during the day. You also know that how employees and leaders handle their emotions at work has a tremendous impact on their productivity.32 The more positive emotions we experience while at work, the more we form positive attitudes toward the organization. Positive emotions, such as joy, affection, and happiness, serve many purposes. When employees experience these positive emotions, they tend to think more creatively, seek out new information and experiences, behave more flexibly, have greater confidence in their competencies, and be more persistent. Positive emotions also help individuals bounce back from adversity and live longer and healthier lives. Individuals who experience positive emotions, especially during stressful times, tend to tolerate pain better, cope with and recover from illness faster, and experience less depression. In contrast, negative emotions, such as anger, disgust, and sadness, tend to narrow an individual’s focus and limit his or her options to seek alternatives. For example, anger tends to lead to a desire to escape, attack, or take revenge, and guilt/shame can result in a person’s desire to withdraw from the situation rather than creatively problem solve. Negative emotions also tend to produce larger, more long-lasting effects than positive emotions. That is, negative emotions tend to stay with individuals longer than positive ones. The distinction between positive and negative emotions is shown in Figure 3.5. Negative emotions are incongruent with the goal you are striving to achieve. For example, which of the six emotions are you likely to experience if you fail the final exam for this course, or if you are dismissed from a job? Failing the exam or losing a job is incongruent with the goal of graduating or being perceived as an accomplished professional. On the other hand, which of the four positive emotions, shown in Figure 3.5, will you likely experience if you graduate with honors or receive a promotion? The emotions experienced in these situations are positive because they are congruent with your goals. Therefore, emotions are goal directed. Positive emotions have been linked to organizational effectiveness. Leaders who express positive emotions encourage employees to feel positive emotions as well. When individuals have positive emotions, they are more likely to set high goals, see and fix mistakes, feel more competent, and have greater problem-solving capabilities. In organizations that recently cut staff, such as AT&T and Hewlett-Packard, those organizations with leaders who displayed positive emotions in such trying times had significantly higher productivity, higher quality, and lower voluntary employee turnover than those leaders who displayed negative emotions. After the attacks on the Hotel Oberoi and Taj Mahal in Mumbai, India, in November 2008, employees at a local restaurant near the hotels were told by their manager that they could leave to protect their safety. Instead, employees and the store supervisors chose to stay. They literally pulled stunned individuals passing by into the store, giving them food, drink, shelter, and emotional support. As one reporter said: “Embedded in a crisis is an opportunity for employers to build loyalty and wholeheartedly provide positive emotions.” A Model of Emotions A model of how emotions affect behavior is shown in Figure 3.6.33 The process starts with a goal. A goal refers to what an individual is trying to accomplish. That is, a goal is your purpose or intent. An eye doctor may have a goal of serving 30 patients a week. Anticipatory emotions refer to the emotions that individuals believe they will feel 93 Learning Goal 4. Explain how emotions impact employees’ performance. 94 Part 2 The Individual in Organizations FIGURE 3. 5 Positive and Negative Emotions Negative Emotions Positive Emotions Anger Happiness/ Joy Fright/Anxiety Pride Guilt/Shame Sadness Love/Affection Envy/ Jealousy Disgust Relief after achievement of or failure to reach their goal. For example, at Sewell Automotive in Dallas, Texas, a salesperson’s goal is to sell 9 cars a month. If they sell between 9 and 19 cars, they receive special recognition from their manager (e.g., flowers, round of golf, choice of cars to drive for the next month). If they sell more than 20 cars in any month, they receive a special letter from Carl Sewell, a weekend package at a local hotel with all expenses paid, as well as flowers, golf, etc. If they sell fewer than 9 cars a month, they will receive coaching on their selling tactics. If they sell fewer than 27 cars in three months, they are dismissed. The key motivational device is to have each salesperson imagine the emotions she will feel when she reaches her goal. The more desirable the implications are for achieving the goal, the more intense will be the anticipated emotions from achieving that goal. Jenny Craig, Weight Watchers, and other diet organizations ask individuals to write down the emotions they anticipate they will experience when they reach their weight goals. Individuals who anticipated positive emotions (e.g., I will feel excited, delighted, etc.) lost more weight than those who didn’t have such positive anticipatory emotions. If the anticipatory emotions are of sufficient intensity to motivate the individual, the individual will engage in those behaviors in order to reach his goal. That is, a person will need to develop a plan, outline the behaviors needed to reach his plan, and exert effort to exhibit those behaviors. Returning to our diet example, if individuals can imagine strong positive emotions from achieving their weight goals, they need to behave in ways that will enable them to reach that positive emotion. That is, they need to start exercising and dieting. Both of these behaviors are linked to loss of weight. As shown in Figure 3.6, goal Chapter 3 Understanding Individual Differences FIGURE 3.6 Role of Emotions in Performance Goal Anticipatory emotions Behaviors Goal attainment attainment is the next step. Did they reach their goals? Yes or no? If yes, then they would experience positive emotions; if no, then they would experience negative emotions. In our dietary plan, researchers found that those individuals who could anticipate positive emotions from achieving their goal were more likely to diet and exercise and reach their goal than those individuals who didn’t engage in these behaviors. Cross-Cultural Differences There are cross-cultural differences in the display of emotions. Most Japanese managers believe that it is inappropriate to get emotional doing business, compared with 40 percent of Americans, 34 percent of French managers, and 29 percent of Italians. Italians, for example, are more likely to accept individuals who display their emotions at work, whereas this would be considered rude in Japan. In the Japanese culture, hiding one’s emotions is considered a virtue because the lack of expression minimizes conflict and avoids drawing attention to the individual. Tomoko Yoshida is a customer relations training expert who works at the Sheraton Hotels in Japan. He teaches hotel employees never to show emotions while talking with a guest. In particular, even if the employee is upset, they are instructed never to point with a finger. Pointing is considered rude. Using one’s whole hand shows more effort and is considered more polite and business-like. Similarly, if a customer is sitting in a restaurant and the waiter raises his or her voice, it signals to the customer that the waiter wants the guest to leave and isn’t welcome any longer. Yoshida also instructs bellmen not to use their feet to close a door or move a customer’s bags or toys even if the bellman is upset. Why? In Japan, individuals believe that the ground is where they walk in shoes. When they go home, they take their shoes off because they don’t want to mix the outside ground with the inside ground. So not using their shoes to move bags—and possibly mixing inside and outside ground—is a sign of respect Yoshida would like the bellmen to exhibit. Yoshikihiko Kadokawa, author of The Power of Laughing Face, found that even in Japan’s culture, the friendliest clerks in some of Japan’s biggest retail stores consistently rang up the highest sales. His research found that smiling salesclerks reported 20 percent more sales than nonsmiling salesclerks. McDonald’s Corporation is using Kadokawa’s techniques in Japan to screen applicants. The company screens out individuals who are too poker faced. When asked by the company to describe a pleasant experience, those applicants who don’t smile and indicate that they find pleasure in what they’re discussing aren’t hired. McDonald’s wants all of their employees to provide the friendly service at the price stated on its menu: “Smiles, 0 yen.”34 Insights for Leaders Let’s consider six ways by which leaders can create positive emotions in their organization: • Express positive emotions—gratitude, generosity, optimism, trust—regularly at work. Start meetings with sincere words of appreciation. Remember that positive emotions are contagious, especially when expressed by direct supervisors and organizational leaders. Outcome emotions 95 96 Part 2 The Individual in Organizations • • • • • A rule of thumb is that the number of positive communications sent by the leader should outnumber the number of negative communications by a ratio of 5:1 if the employee is to have positive emotions at work. Give unexpected kindness and reach out to others when it is least expected. When the leader engages in positive emotions and behaviors when it goes against the norm, the element of surprise and courage becomes a powerful example to others, both strengthening individuals’ trust in their leader and role-modeling behavior for others to follow. Help individuals find positive meaning in their day-to-day work lives. The leader should assist employees with seeing how their work contributes to a greater good and whom they are helping through their efforts. Provide opportunities for employees to help each other and to express appreciation for the help they receive from others. Celebrate small wins with employees so that they experience ongoing success and the associated positive emotions. Chapter Summary 1. Explain the basic sources of personality formation. 2. Identify a set of personality dimensions that affect performance. 3. Describe the attitudes that affect performance. 4. Explain how emotions impact employees’ performance. Personality is a person’s set of relatively stable characteristics and traits that account for consistent patterns of behavior in various situations. Each individual is like other individuals in some ways and in some ways is unique. An individual’s personality is determined by inherited genes and the environment. Experiences occur within the framework of the individual’s biological, physical, and social environment—all of which are modified by the culture, family, and other groups to which the person belongs. We reviewed five basic cultural values—individualism and collectivism, power distance, uncertainty avoidance, gender role orientation, and long-term orientation—that impact the development of a person’s personality. An individual’s personality may be described by a set of factors known as the Big Five personality factors. Specifically, these personality factors describe an individual’s degree of emotional stability, agreeableness, extraversion, conscientiousness, and openness. We hope that you took the opportunity to assess your own Big Five personality dimensions in Table 3.1. Many specific personality dimensions, including self-esteem, locus of control, and emotional intelligence, have important relationships to work behavior and outcomes. In addition, an understanding of interactions between the person and the situation is important for comprehending organizational behavior. Attitudes are patterns of feelings, beliefs, and behavioral tendencies directed toward specific individuals, groups, ideas, issues, or objects. Attitudes have affective (feelings, emotions), cognitive (beliefs, knowledge), and behavioral (a predisposition to act in a particular way) components. The relationship between attitudes and behavior isn’t always clear, although important relationships exist. We reviewed how the attitudes of hope, job satisfaction, and organizational commitment affect behavior in many organizations. Employees show a variety of emotions during the day. Some of these are positive and can lead to more effective performance, whereas others are negative and can lead to poor performance. We introduced how emotions can influence the productivity of employees. Chapter 3 Understanding Individual Differences 97 Key Terms and Concepts Agreeableness, 79 Anticipatory emotions, 93 Attitudes, 85 Collectivism, 73 Conscientiousness, 80 Emotional intelligence, 83 Emotional stability, 79 Emotions, 93 External locus of control, 82 Extraversion, 80 Gender role orientation, 74 Goal, 93 Hope, 87 Individual differences, 70 Individualism, 73 Internal locus of control, 82 Job satisfaction, 88 Locus of control, 82 Long-term orientation, 74 Openness, 80 Organizational commitment, 91 Personality, 70 Personality trait, 77 Power distance, 73 Reliability, 80 Self-awareness, 83 Self-esteem, 81 Self-motivation, 84 Social empathy, 83 Social skills, 84 Uncertainty avoidance, 74 Validity, 80 Discussion Questions 1. 2. 3. 4. 5. Visit Apple’s website (www.apple.com) and enter “Steve Jobs” in the search icon. Then click on the feature showing him deliver a speech. How does this speech illustrate the factors in the Big Five personality profile? Atlas Sports Genetics (www.atlasgene.com.) offers to test parents to determine whether their children have inherited the genes to be a successful football player, marathon runner, etc. What are some ethical issues raised by doing this? How might the values of a culture impact the development of a person’s personality? What cultural dimensions seem to have the most influence on this developmental process? What influences on personality development seem most important to you? Why? Using the Big Five personality factors, describe the personality of (a) a close family member and (b) a person for whom you have worked. How do these factors affect your behavior toward them? 6. Can individuals change their attitude without changing their behavior? Give an example. 7. Describe how you can develop your hope attitude to improve your performance. 8. Don Tuttle, CEO of Top Gun Ventures, thinks that satisfied workers are more productive than less satisfied workers. Do you agree or disagree with him? Explain. 9. Think of an organization that you have worked for. What factors seemed to influence your commitment to this organization? 10. In what ways does the model of emotions affect your attitude and performance? Experiential Exercises and Case Experiential Exercise: Self Competency What Are Your Cultural Values?35 Instructions In the following questionnaire, we ask you about your perception of your own culture’s values. Please indicate the extent to which you agree or disagree with each statement. For example, if you strongly agree with a particular statement, you would circle the 5 next to that statement. 1 2 3 4 5 Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 98 Part 2 The Individual in Organizations Questions _____ 1. _____ 2. _____ 3. _____ 4. _____ 5. _____ 6. _____ 7. _____ 8. _____ 9. _____ 10. _____ 11. _____ 12. _____ 13. _____ 14. _____ 15. _____ 16. _____ 17. _____ 18. _____ 19. _____ 20. _____ 21. _____ 22. _____ 23. _____ 24. _____ 25. It is important to have job requirements and instructions spelled out in detail so that employees always know what they are expected to do. 1 2 3 4 5 Managers expect employees to follow instructions and procedures closely. 1 2 3 4 5 Rules and regulations are important because they inform employees about what the organization expects of them. 1 2 3 4 5 Standard operating procedures are helpful to employees on the job. 1 2 3 4 5 Instructions for completing job tasks are important for employees on the job. 1 2 3 4 5 Group welfare is more important than individual rewards. 1 2 3 4 5 Group success is more important than individual success. 1 2 3 4 5 Being accepted by the members of the work group is very important. 1 2 3 4 5 Employees should only pursue their goals after considering the welfare of the group. 1 2 3 4 5 Managers should encourage group loyalty even if individual goals suffer. 1 2 3 4 5 Individuals should be expected to give up their goals in order to benefit group success. 1 2 3 4 5 Managers should make most decisions without consulting subordinates. 1 2 3 4 5 Managers must often use authority and power when dealing with subordinates. 1 2 3 4 5 Managers should seldom ask for the opinions of employees. 1 2 3 4 5 Managers should avoid off-the-job social contacts with employees. 1 2 3 4 5 Employees should not disagree with management decisions. 1 2 3 4 5 Managers should not delegate important tasks to employees. 1 2 3 4 5 Managers should help employees with their family problems. 1 2 3 4 5 Management should see to it that workers are adequately clothed and fed. 1 2 3 4 5 Managers should help employees solve their personal problems. 1 2 3 4 5 Managers should see that health care is provided to all employees. 1 2 3 4 5 Management should see that children of employees have an adequate education. 1 2 3 4 5 Management should provide legal assistance for employees who get in trouble with the law. 1 2 3 4 5 Management should take care of employees as they would treat their children. 1 2 3 4 5 Meetings are usually run more effectively when they are chaired by a man. 1 2 3 4 5 _____ 26. It is more important for men to have professional careers than it is for women to have professional careers. 1 2 3 4 5 _____ 27. Men usually solve problems with logical analysis; women usually solve problems with intuition. 1 2 3 4 5 _____ 28. Solving organizational problems usually requires an active, forcible approach typical of men. 1 2 3 4 5 _____ 29. It is preferable to have a man in a high-level position rather than a woman. 1 2 3 4 5 Interpretation The questionnaire measures each of the five basic culture dimensions. Your score can range from 5 to 35. The numbers in parentheses that follow the title of the value are the question numbers. Add the scores for these questions to arrive at your total score for each cultural value. The higher your score, the more you demonstrate the cultural value. Value 1: Uncertainty Avoidance (1, 2, 3, 4, 5). Your score _____. A high score indicates a culture in which individuals often try to make the future predictable by closely following rules and regulations. Organizations try to avoid uncertainty by creating rules and rituals that give the illusion of stability. Value 2: Individualism–Collectivism (6, 7, 8, 9, 10, 11). Your score _____. A high score indicates collectivism, or a culture in which individuals believe that group success is more important than individual achievement. Loyalty to the group comes before all else. Employees are loyal and emotionally dependent on their organization. Value 3: Power Distance (12, 13, 14, 15, 16, 17). Your score _____. A high score indicates a culture in which individuals believe in the unequal distribution of power among segments of the culture. Employees fear disagreeing with their bosses and are seldom asked for their opinions by their bosses. Value 4: Long-Term Orientation (18, 19, 20, 21, 22, 23, 24). Your score _____. A high score indicates a culture in which individuals value persistence, thrift, and respect for tradition. Young employees are expected to follow orders given to them by their elders and delay gratification of their material, social, and emotional needs. Value 5: Gender Role Orientation (25, 26, 27, 28, 29). Your score _____. A high score indicates masculinity, or a culture in which individuals value the acquisition of money and other material things. Successful managers are viewed as aggressive, tough, and competitive. Earnings, recognition, and advancement are important. Quality of life and cooperation are not as highly prized. Questions 1. 2. According to your perception of your culture, what values are most important in your culture? How do these values influence the behaviors of individuals? Chapter 3 Understanding Individual Differences 99 Experiential Exercise: Self Competency What’s Your Emotional IQ?36 An individual difference that has recently received a great deal of interest is emotional intelligence (EQ). You can assess your EQ by using the following scale. Instructions Using a scale of 1 through 4, where 1 = strongly disagree, 2 = somewhat disagree, 3 = somewhat agree, and 4 = strongly agree, respond to the 32 statements. _____ 1. I know when to speak about my personal problems to others. _____ 2. When I’m faced with obstacles, I remember times I faced similar obstacles and overcame them. _____ 3. I expect that I will do well on most things. _____ 4. Other individuals find it easy to confide in me. _____ 5. I find it easy to understand the nonverbal messages of other individuals. _____ 6. Some of the major events of my life have led me to reevaluate what is important and not important. _____ 7. When my mood changes, I see new possibilities. _____ 8. Emotions are one of the things that make life worth living. _____ 9. I am aware of my emotions as I experience them. _____ 10. I expect good things to happen. _____ 11. I like to share my emotions with other individuals. _____ 12. When I experience a positive emotion, I know how to make it last. _____ 13. I arrange events others enjoy. _____ 14. I seek out activities that make me happy. _____ 15. I am aware of the nonverbal messages I send to others. _____ 16. I present myself in a way that makes a good impression on others. _____ 17. When I am in a positive mood, solving problems is easy for me. _____ 18. By looking at facial expressions, I can recognize the emotions that others are feeling. _____ 19. I know why my emotions change. _____ 20. When I am in a positive mood, I am able to come up with new ideas. _____ 21. I have control over my emotions. _____ 22. I easily recognize my emotions as I experience them. _____ 23. I motivate myself by imagining a good outcome to the tasks I do. _____ 24. I compliment others when they have done something well. _____ 25. I am aware of the nonverbal messages other individuals send. _____ 26. When another person tells me about an important event in his or her life, I almost feel as though I have experienced this event myself. _____ 27. When I feel a change in emotions, I tend to come up with new ideas. _____ 28. When I am faced with a challenge, I usually rise to the occasion. _____ 29. I know what other individuals are feeling just by looking at them. _____ 30. I help other individuals feel better when they are down. _____ 31. I use good moods to help myself keep trying in the face of obstacles. _____ 32. I can tell how individuals are feeling by listening to the tone of their voices. Scoring Add your responses to questions 1, 6, 7, 8, 12, 14, 17, 19, 20, 22, 23, and 27. Put this total here_____. This is your selfawareness score. Add your responses to questions 4, 15, 18, 25, 29, and 32. Put this total here_____. This is your social empathy score. Add your responses to questions 2, 3, 9, 10, 16, 21, 28, and 31. Put this total here_____. This is your self-motivation score. Add your responses to questions 5, 11, 13, 24, 26, and 30. Put this total here_____. This is your social skills score. Discussion and Interpretation The higher your score is in each of these four areas, the more emotionally intelligent you are. Individuals who score high (greater than 36) in self-awareness recognize how their feelings, beliefs, and behavior affect others. They accurately assess their strengths and limitations, and have a strong sense of their selfworth and capabilities. Individuals who score high (greater than 18) in social empathy are thoughtful and consider others’ feelings when making decisions and weigh those feelings along with other factors when making a decision. They are good at understanding others, taking an active interest in their concerns, empathizing with them, and recognizing the needs of others. Individuals who score high (greater than 24) in selfmotivation can keep their disruptive emotions and impulses under control, maintain standards of integrity and honesty, are conscientious, adapt their behaviors to changing situations, and have internal standards of excellence that guide their behaviors. That is, these individuals always want to do things better and seek feedback from others about their performance. They are passionate about their work. Individuals who have high (greater than 18) social skills sense others’ developmental needs, inspire and lead groups, send clear and convincing messages, build effective interpersonal relationships, and work well with others to achieve shared goals. They build effective bonds between individuals. Often, they appear to be socializing with coworkers, but they are actually working to build solid relationships at work. Questions 1. 2. Use EQ to describe a friend. What are this person’s strengths and weaknesses? Is EQ genetic or shaped by experience? 100 Part 2 The Individual in Organizations Case: Self Competency Larry Ellison at Oracle Computer37 Larry Ellison, founder and CEO of Oracle Computer whose net worth is in the billions, has been the driving force at Oracle since he started the company more than two decades ago. He is now the fourth richest man in America with an annual salary of more than $72 million, a pay package that is 12 times bigger than the average pay of CEOs in the technology industry. Addressing his stockholders at Oracle’s Redwood Shores, California, headquarters in 2008, he delivered a 30-minute profanity-laced speech in which he attacked his partners, competitors, the government, and most individuals in the room. PeopleSoft CEO Craig Conway called him the modern-day “Genghis Khan” because of his atrociously bad corporate behavior. In 2008 when Ellison proposed to buy PeopleSoft, Conway noted that the takeover was nothing more than a sham intended to disrupt PeopleSoft’s sales. PeopleSoft employees openly criticized Ellison. Pleasanton City officials, home of PeopleSoft, questioned the integrity of a man who would insensitively target thousands of jobs just to claim a corporate victory. He is known for his corporate ruthlessness, which is outlined in a book by Mike Wilson titled The Difference Between God and Larry Ellison. Go to Oracle’s blog (www.oracle.com) and read the blogs from irate customers and employees. Ellison’s brash disdain for failure and obsession with reaching the top started as a child when his adoptive father tried to lower his self-esteem, telling him that he would never amount to anything. His father fled Russia in the early 1900s, but was able put together enough money to make down payments on some apartment buildings in Chicago. He then leveraged those properties to buy more. When the tenants didn’t pay rent during the Great Depression of the 1930s, he evicted them. His father was very hard on him also, but that made Ellison tough and competitive. He dropped out of the University of Illinois in 1964 because college was holding him back. He nearly died in a high-profile yachting race off the coast of Australia in 1998. His boat, named the Sayonara, ran into a hurricane and nearly sank, but Ellison was able to win the Sydney-to-Hobart race by his sheer persistence and determination to win at all costs. One of Ellison’s favorite quotes is from a Zen proverb: “Your garden is never complete until there is nothing left to take out of it.” To his competitors, the message is clear: Ellison will not be satisfied until there is no more business to take away from competitors. Ellison runs Oracle without much input from others. He is famous for firing individuals because he doesn’t like them. He lost Oracle’s President Raymond Lane and senior executive Gary Bloom and refused to name successors, calling such a move dumb. He runs a tight ship that rewards employees who produce and squeezes out those who don’t measure up to his standards. Individuals stay at Oracle because they are paid very well and fear recrimination. According to Thomas Siebel, founder of Siebel Systems, which Oracle bought a few years ago, “Larry is a control freak. He has the knack for taking the best and the brightest and trying to destroy them.” Ellison defectors often end up competing against him. “Larry Ellison is a silver-backed alpha male gorilla,” says his former friend and Oracle employee David Roux. “He will respond only to a direct challenge.” Ellison likes to compete rather than collaborate. For example, he gave out gold coins as sales bonuses when Oracle drove Ingres Sybase out of business. In his bid for PeopleSoft, he said that if he and PeopleSoft CEO Craig Conway and Conway’s dog were standing next to each other and Ellison had only one bullet, it wouldn’t be for the dog. Ellison might be a nightmare to work for, but his methods have created unimaginable wealth for the company’s shareholders, managers, and employees. Since its initial stock offering in 1986, Oracle’s share price has risen by more than 1,000 percent. It began with a staff of 3; today it employees more than 50,000 worldwide. Oracle’s share of the database market is 49 percent. Questions 1. Using the Big Five personality factors, describe Ellison’s personality characteristics. How do these affect others? 2. What’s Ellison EQ? Why do individuals work for him? chapter 4 Perceptions and Attributions Learning Goals After studying this chapter, you should be able to: 1 Describe the major elements in the perceptual process. 2 Identify the main factors that influence what the individual perceives. 3 Identify the factors that determine how one person perceives another. 4 Describe the primary errors in perception that people make. 5 Explain how attributions influence behavior. Learning Content Learning from Experience Jim Sinegal, Cofounder and CEO of Costco Perceptual Process Across Cultures Competency McDonald’s Use of Feng Shui Perceptual Selection Communication Competency Hand Gestures Person Perception Self Competency Doing Business in Arab Countries Perceptual Errors Attribution Process Ethics Competency The Gap Experiential Exercise and Case Experiential Exercise: Self Competency The Perception Process Case: Self Competency Joan Murphy Learning from Experience Jim Sinegal, Cofounder and CEO of Costco To learn more about Costco, go to www.costco.com. ATSUSHI TSUKADA/AP PHOTO © PERSONS NAME/STOCK COMPANY Jim Sinegal is the cofounder, president, and CEO of Costco Wholesale, America’s fourth largest retailer, which opened its first warehouse in 1983. Costco is a leading warehouse-club operator with 546 warehouses worldwide. The firm has 142,000 employees, 53 million gold star members, and 5.6 million business members, each paying $50 per year to join. Revenues have grown by 70 percent in the last five years to exceed $72 billion. Costco has an 87 percent membership renewal rate. A typical Costco store stocks 4,000 types of items, with a limited number of each type, such as four brands of toothpaste. Unlike the stereotypical CEO, Sinegal doesn’t try to distance himself from his employees. He even wears a name tag—but not one that says “Jim, the CEO” or “Jim, Costco Founder.” It just says “Jim.” He easily could be mistaken for a stock clerk when he visits warehouses, sometimes up to 12 a day. On Costco’s website, where executive officers are listed, his name appears in alphabetical order—not what you would expect of a corporate CEO. His management philosophy is simple. He states: “We have said from the very beginning: ‘We’re going to be a company that’s on a first-name basis with everyone.’” That also includes answering his own phone and doing his own faxes. He continues: “If a customer’s calling and they have a gripe, don’t you think they kind of enjoy the fact that I picked up the phone and talked to them?” Because he listened to customers, Costco started its Kirkland Signature Wines brand, which has sold very well, but also had to exit the home-improvement and magazine businesses. Sinegal believes that customers shop at Costco for quality. Sinegal looks at a warehouse from the standpoint of a customer. Does the building have the right goods out? Is it well stocked, clean, and safe? He believes that when you have a sloppy building, it’s a sign that there is pilfering and shoplifting. Many executives think shareholders are best served if they do all they can to hold down costs, including the costs of labor. Costco’s approach is different, in terms of how employees are treated. Sinegal says, “[Paying high wages] absolutely 104 Part 2 The Individual in Organizations makes good business sense. Most people agree that we’re the lowest-cost provider. Yet we pay the highest wages. So it must mean we get better productivity. It’s axiomatic in our business—you get what you pay for.” He is working on having employees work 10-hour days so they don’t have to drive to work every day. This could save employees 20 percent on their gasoline purchases. Sinegal remarks: “Obviously it’s not just wages that motivate people. How much they are respected, and whether they feel they can have a career at a company, are also important.” One of Sinegal’s cardinal rules is that no branded item, such as a Xerox printer, can be marked up by more than 14 percent and no private-label item, such as Costco gasoline, by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent and department stores by 50 percent or more. The secret to Costco’s profit is simple. Its margin on each item isn’t very high—but Sinegal says they make it up on volume. Some Wall Street analysts think Costco is also overly generous to its customers. One analyst states: “At Costco, it’s better to be an employee or a customer than a shareholder.” Another analyst asserts: “Whatever goes to employees comes out of the pockets of shareholders.” Sinegal replies: “On Wall Street, they’re in the business of making money between now and next Thursday. I don’t say that with any bitterness, but we can’t take that view. We want to build a company that will still be here 50 and 60 years from now.” Interestingly, Costco stock has done very well. For the past several years, Sinegal has received a salary of $350,000, plus stock options. That is low for a CEO of a $72 billion-per-year business. By comparison, the typical CEO of a large American company makes more than 430 times the pay of the average worker. Sinegal states, “I figured that if I was making something like 12 times more than the typical person working on the floor that was a fair salary.” Of course, as a cofounder of the company, Sinegal owns a lot of Costco stock.1 The Learning from Experience feature illustrates the importance of how a leader’s perceptions of his employees influence employees’ behavior. People base their behaviors on what they perceive, not necessarily on what reality is. In this chapter, we explore the importance of perception and attribution. First, we describe the perceptual process. Then, we examine the external and internal factors that influence perception, the ways that people organize perceptions, the process of person perception, and various errors in the perceptual process. Finally, we explore the attributions that people make to explain their behaviors and those of others. Learning Goal 1. Describe the major elements in the perceptual process. Perceptual Process As Jim Sinegal discovered, it is the perception of reality—not reality—that influences behavior. Perception is the process by which the individual selects, organizes, interprets, and responds to information. Employees are constantly exposed to a variety of information. They know when leaders are being phony. This information is processed in a person’s mind and organized to form concepts pertaining to what is sensed or experienced. What happens when Tina Potter goes to Costco to buy a bouquet of flowers? Before buying it, she looks at the types of flowers in the bouquet, looks at the size of the bouquet and other bouquets that are available in her price range, and smells the flowers to see if they are fresh. After all of those activities, she decides whether or not to purchase the bouquet. Her mind processes all of this information to make a decision about whether to buy the bouquet and where it would look nice in her home. She gathers this information by using her three senses—touch, sight, and smell. This Chapter 4 Perceptions and Attributions represents the psychological process whereby individuals take information from their environment and make sense of it.2 The key words in the definition of perception are select and organize. Different people often perceive a situation differently, both in terms of what they selectively perceive and how they organize and interpret what is perceived. Figure 4.1 summarizes the basic elements in the perceptual process from initial observation to final response. Everyone selectively pays attention to some aspects of the environment and selectively ignores other aspects. For example, when shoppers pull into the gasoline station at Costco, what objects in their environment are they paying attention to and what do they ignore? What do they observe? A well-lit station, clean areas to pump gas, fully stocked paper towel dispensers with squeegees to wipe and clean windshields, etc., are objects people notice when they pull into a gas line at Costco. They might ignore FIGURE 4.1 The Perceptual Process Objects in the person’s environment Observation Perceptual Selection Perceptual Organization Interpretation Response 105 106 Part 2 The Individual in Organizations signs advertising freshly brewed coffee or the price of Coke. A person’s selection process involves both external and internal factors. In other words, a complex set of factors, some internal to the person (attitudes) and some in the external environment, combine to determine what the person perceives. We discuss this important process in more detail shortly. The individual organizes the stimuli selected into meaningful patterns. How people interpret what they perceive varies considerably. The Experiential Exercise at the end of this chapter titled The Perception Process permits you to test your current level of perceptual skills. For example, a wave of the hand may be interpreted as a friendly gesture or as a threat, depending on the circumstances and the state of mind of those involved. Leaders and employees need to recognize that perceptions of events and behaviors may vary among individuals and be inaccurate. As suggested in Figure 4.1, people’s interpretations of their environments affect their responses. Everyone selects and organizes things differently, which is one reason why people behave differently in the same situation. In other words, people often perceive the same things in different ways, and their behaviors depend, in part, on their perceptions. The following Across Cultures Competency feature shows how McDonald’s is using feng shui to design its restaurants. Feng shui is the belief that space needs to be in harmony with the environment.3 Literally, feng means “wind” and shui “water.” Feng shui was developed thousands of years ago in a village in China. Villagers studied the formations of land and the ways the wind and water worked together to help them survive. Over time feng shui developed and was used by emperors to ensure their successes. According to feng shui experts, when a harmonious arrangement is created between the wind and water, the individual or organization prospers and the quality of life improves. According to Tan Khoon Yong, a feng shui master, this balance can be achieved by balancing the magnetic flow in which people live. According to feng shui, what is being perceived may be subtle and greatly influences perceptions and behaviors.4 Across Cultures competency RENE MACURA/AP PHOTO McDonald’s Use of Feng Shui McDonald’s restaurants in the L.A. Asian community use red accents to symbolize fire, good luck, laughter, and prosperity. The only familiar signs at the McDonald’s in the Asian community in Los Angeles are the golden arches, the drive-through, and the menu. Gone are the plastic furniture, Ronald McDonald, and the red and yellow palette that has symbolized the world’s largest hamburger chain. Leather seats, earth tones, bamboo plants, a wood ceiling, and water trickling down glass panels have taken their place. Red accents are used throughout the restaurant to symbolize fire and “good luck, laughter and prosperity.” The restaurant is designed using the principles of feng shui, which is meant to help diners achieve happiness and fortune. McDonald’s uses the basic principles of placing the five elements—earth, water, fire, metal, and wood—around the restaurant to Chapter 4 increase the flow of chi or energy. The number 4, considered bad luck in some Asian cultures, is absent in the street address and the phone number. The walls are curved. The ceiling and floor tiles are placed at distinctive angles, and the doors swing open and shut in opposite directions. There is also a wall displaying three pieces of brushed aluminum graphic art, one Perceptions and Attributions 107 featuring a crane, because it represents fertility; another featuring a koi fish, representing prosperity; and the third an iguana, a symbol for the community. According to Bryan Carmack, the manager, “We wanted to make the restaurant a little bit more of a destination. The goal is to bring harmony and a peaceful place to be.” To learn more about Feng Shui, go to www.fengshuisociety.org.uk. Perceptual Selection The phone is ringing, your TV is blaring, a dog is barking outside, your PC is making a strange noise, and you smell coffee brewing. Which of these events will you ignore? Which will you pay attention to? Can you predict or explain why one of these events grabs your attention at a particular time? Selective screening is the process by which people filter out most information so that they can deal with the most important matters. Perceptual selection depends on several factors, some of which are in the external environment and some of which are internal to the perceiver. External Factors As we noted in Chapter 3, a common external force affecting behavior is culture. Different cultures train people to respond to different cues. Do the French and Chinese see the world in the same way? No. In fact, no two national groups see the world in exactly the same way. When Mexican children simultaneously see a picture of a bullfight and a baseball game, they generally remember only seeing the bullfight. American children, on the other hand, remember seeing only the baseball game. Why do the children not remember both pictures? This is the nature of perception. Perceptual patterns are not absolute. Misperceptions cause some managers to fail in their international assignments. Many U.S. firms, such as Procter & Gamble, Microsoft, and PepsiCo, are competing in global markets where English is not the first language either read or spoken. Therefore, language is becoming an increasingly important consideration when choosing product names and slogans. Frito-Lay, a division of PepsiCo, is trying to become a dominant supplier of salty nuts and chips to China’s $450 million market. Frito-Lay’s senior management believes that China has tremendous growth potential. However, its managers realize that Chinese consumers have different perceptions of their product depending on where they live. People in Hong Kong like salty chips, in Beijing they like meaty ones, and in Xian, they like spicy flavors. Frito-Lay introduced “cool lemon” potato chips. These yellow, strongly lemon-scented chips are dotted with greenish lime specks of mint and are sold in a package featuring images of breezy blue skies and rolling green grass. Why “cool lemon”? Chinese people consider fried foods hot and therefore do not eat them in the summer months. Cool is better in the summer months.5 What are some other external factors that influence our perceptual process? What does Jim Sinegal want customers to notice when they arrive at Costco? Factors present in the warehouse can affect whether customers sense important information Learning Goal 2. Identify the main factors that influence what the individual perceives. 108 Part 2 The Individual in Organizations and these factors can influence whether this information is used in perceptions. Let’s review some external factors that may affect perception. In each case we present an example to illustrate the principle. • • • • • • Size. The larger the object, the more likely it is to be perceived. The size of the new buildings to be built where the Twin Towers in New York City were destroyed by terrorist attacks on September 11, 2001, will get noticed more than an alleyway on 42nd street. The new 421-meter (1,368-feet) Jin Mao Tower in Shanghai’s Pudong District is more likely to be seen than the eight-story Howard Johnson Hotel in Shanghai. Intensity. The more intense an external factor (bright lights, loud noises, and the like), the more likely it is to be perceived. The language in an e-mail message from a manager to an employee can reflect the intensity principle. For example, an e-mail message that reads “Please stop by my office at your convenience” wouldn’t fill you with the same sense of urgency as an e-mail message that reads “Report to my office immediately!” Contrast. External factors that stand out against the background or that aren’t what individuals expect are the most likely to be noticed. In addition, the contrast of objects with others or with their backgrounds may influence how they are perceived. Salespeople at JCPenney, Macy’s, Saks, and other department stores are instructed to show men the most expensive suit first. After being exposed to the most expensive suit, a man sees the price of the less expensive suit as appearing smaller by comparison. Presenting a least costly suit first and following with an expensive one makes the expensive one seem even more costly. Another advantage of this tactic is that when it comes time to buy accessories, such as ties, shirts, and belts, these things don’t seem that expensive next to the cost of the suit. Motion. A moving factor is more likely to be perceived than a stationary factor. PlayStation games use motion to attract people to play them. Repetition. A repeated factor is more likely to be noticed than a single factor. Marketing managers use this principle in trying to get the attention of prospective customers. An advertisement may repeat key ideas. The ad itself may be presented many times for greater effectiveness. Marketing managers at Nike developed the Nike “swoosh” symbol that is used consistently worldwide on all of its products. Novelty and familiarity. Either a familiar or a novel factor in the environment can attract attention, depending on the circumstances. A Korean businessman entered a client’s office in Stockholm and was greeted by a woman sitting behind a desk. He asked to see the president. The woman responded by saying that she (the president) would be glad to see him. The Korean was confused because he assumed that most women are secretaries and not presidents of a company. The misinterpretation of the situation was caused by a novel situation for him.6 A combination of these or similar factors may be existing at any time and, hence, affecting perception. Along with a person’s internal factors, they determine whether any particular stimulus is more or less likely to be noticed. Nowadays the visual aspects of nonverbal communications are receiving increasing attention because of the global markets for organization. Managers may offend someone in a different culture with hand gestures without ever knowing that these are offensive. For example, thumbs up may signal “okay” in America, but in parts of the Arab world, it means “Go to hell.” Look at some common hand gestures in the following Communication Competency feature. Did you know what you might be communicating across different cultures with your hand gestures? Chapter 4 Perceptions and Attributions Text not available due to copyright restrictions Internal Factors The perception process is also influenced by several factors that are related to the perceiver. These are internal factors that influence what the individual sees. Effective leaders are able to develop more complete and accurate perceptions of various situations and people with whom they communicate than ineffective leaders. An effective manager knows when people are sincere, honest, and dependable. These accurate perceptions are crucial to being an effective leader. The powerful role that internal factors play in perception shows itself in many ways. Let’s review how personality, learning, and motivation influence the process of perceiving other people. 109 110 Part 2 The Individual in Organizations Personality Personality has an interesting influence on what and how individuals perceive things. Any of the several personality dimensions that we discussed in Chapter 3, along with numerous other traits, may influence the perceptual process.7 Personality appears to affect strongly how an individual perceives other people. In Chapter 3, we introduced you to the Big Five personality factors. To illustrate how personality can influence perception, let’s examine one of the Big Five factors, conscientiousness. A conscientious person tends to pay more attention to external environmental cues than does a less conscientious person. On the one hand, less conscientious people are impulsive, careless, and irresponsible. They see their environment as hectic and unstable, which affects the way in which they make perceptual selections. On the other hand, more conscientious people are likely to organize their perceptions into neat categories, allowing them to retrieve data quickly and in an organized manner. In brief, this person is more careful, methodical, and disciplined in making perceptual selections. Learning Another internal factor affecting perceptual selection is learning. Among other things, learning determines the development of perceptual sets. A perceptual set is an expectation of a particular interpretation based on the person’s past experience with the same or a similar object. What do you see in Figure 4.2? If you see an attractive, elegantly dressed Ethical Insight woman, your perception concurs with the majority of firsttime viewers. However, you may agree with a sizable minority Obey the law means obey the law. There and see an ugly, old woman. The woman you first see depends, is no exception. Sloppy behavior is not in large part, on your perceptual set. going to be tolerated. We want all our Leaders’ and employees’ past experiences and learning employees to be careful and treat cusstrongly influence their perceptions. Leaders are influenced tomers with respect. by their functional backgrounds (e.g., accounting, engineering, Jim Sinegal, CEO, Costco marketing, or production) when making decisions. Because perceptions influence how employees and managers behave toward one another, it is important to understand a leader’s perceptual set. What are the factors that influence Jim Sinegal’s perceptions of Costco? Motivation Motivation also plays an important role in determining what a person perceives. A person’s most urgent needs and desires at any particular time can influence perception. For example, imagine that, while taking a shower, you faintly hear what sounds like the telephone ringing. Do you get out of the shower, dripping wet, to answer it? Or do you conclude that it is only your imagination? Your behavior in this situation may depend on factors other than the loudness of the ringing. If you are expecting an important call, you’re likely to leap from the shower. If you aren’t expecting a call, you’re more likely to attribute the ringing sound to shower noises. Your decision is influenced by your expectations and motivations. In general, the individual perceives things that promise to help satisfy their needs and that they have found rewarding in the past. The individual tends to ignore mildly disturbing events (a barking dog), but will react to dangerous events (the house being on fire). Summarizing an important aspect of the relationship between motivation and perception is the Pollyanna principle, which states that people process pleasant events more efficiently and accurately than they do unpleasant events. For example, an employee who receives both positive and negative feedback during a performance appraisal session may more easily and clearly remember the positive statements than the negative statements.8 Chapter 4 Perceptions and Attributions 111 FIGURE 4.2 Test of Perceptual Set Person Perception The preceding discussion shows that perceiving others accurately can be challenging. Because perceptions influence how people behave toward one another, there is a need to understand the factors that influence both the perceiver and the situation in general. Person perception is the process by which the individual attributes characteristics or traits to other people. The person perception process relies on the same general process of perception shown in Figure 4.1. That is, the process follows the same sequence of observation, selection, organization, interpretation, and response. However, the object being perceived is another person. Perceptions of situations, events, and objects are important, but individual differences in perceptions of other people are crucial at work. For example, suppose that you meet a new employee. To get acquainted and make him feel at ease, you invite him to lunch. During lunch, he begins to tell you his life history and focuses on his accomplishments. Because he talks only about himself (he asks you no questions about yourself), your first impression is that he is very self-centered. In general, the factors influencing person perception are the same as those that influence perceptual selection: Both external and internal factors affect person perception. However, we may usefully categorize factors that influence how a person perceives another as: characteristics of the perceived, • • • characteristics of the perceiver, and the situation or context within which the perception takes place. The Perceived When perceiving someone else, you need to be aware of various cues given by that person: facial expressions, general appearance, skin color, posture, age, gender, voice quality, personality traits, behaviors, and the like. Such cues usually provide important information about the person. Each individual seems to have implicit ideas about the relationships among physical characteristics, personality traits, and specific behaviors.9 Implicit personality theory is a person’s beliefs about the relationships between another’s physical characteristics and personality. Table 4.1 illustrates the implicit personality theory in action. A person may believe that some voice-quality characteristics indicate that Learning Goal 3. Identify the factors that determine how one person perceives another. 112 Part 2 The Individual in Organizations TABLE 4.1 Personality Judgments on the Basis of Voice Quality VOICE QUALITY: HIGH IN MALE VOICE FEMALE VOICE Breathiness Younger, artistic Feminine, pretty, petite, shallow Flatness Nasality Similar results for both sexes: Similar results for both sexes: Tenseness Cantankerous (old, unyielding) Masculine, cold, withdrawn Having many socially undesirable characteristics Young, emotional, high-strung, not highly intelligent Source: Adapted from Hinton, P. R. The Psychology of Interpersonal Perception, London: Routledge, 1993, 16. the speaker has certain personality traits. However, the relationships presented in Table 4.1 have no scientific basis. Similarly, think about your first contact with someone you met on MySpace, Facebook, or an online dating service. It is not the person’s voice that you consider, but perhaps the person’s physical appearance. Later, on meeting, did that person look and act as you expected? The Perceiver Listening to an employee describe the personality of a coworker may tell you as much about the personality of the employee doing the describing as it does about that of the person being described. That shouldn’t surprise you if you recall that factors internal to the perceiver, including personality, learning, and motivation, influence perception. A person’s own personality traits, values, attitudes, current mood, and past experience influence how that person perceives someone else. Accurately perceiving an individual raised in another culture often is difficult. In China, for example, the communication style is generally indirect. Chinese may talk around the point and hedge their speech using words such as maybe or perhaps because they must protect their social face and respect social roles (e.g., manager, employee). The Chinese will lose social face if they fail to understand what is being asked or cannot do what is requested. Therefore, by being vague, Chinese businesspeople save face and can continue to build and maintain relationships. Rick Linck, CEO of Asia Pacific for Heineken Brewing Company, learned that when communicating with beer distributors in China, distributors frequently say “Let me look into this further” to avoid a direct no or to avoid admitting that they cannot do what he asked. Linck learned to communicate with distributors by saying “What do you think about this?” instead of saying “Is this acceptable?”10 Cross-cultural negotiations are an important part of every global manager’s job, and the dynamics of negotiating reflect each culture’s values and beliefs. In Mexico, personal qualities and social connections influence the selection of a negotiator, whereas in the United States, many companies select negotiators on the basis of position and competence. In U.S.–Chinese negotiations, U.S. companies often prefer to send a small team or only a single person to represent them, whereas the Chinese prefer to send a large group. The large group allows them to have representatives from different areas of the organization present at the negotiations. The Situation in Foreign Assignments As more and more employees are asked to take assignments in foreign countries, opportunities for living and working in different countries arise. Siemens, the German electronics firm with headquarters in Munich, Germany, estimates that almost 25 percent Chapter 4 Perceptions and Attributions of its managers take expatriate assignments. Expatriates are employees who live and work outside of their home country.11 There are now more than 500,000 U.S. expatriate managers living around the globe. Because of the high cost of sending employees and their families to foreign countries for extended periods of time (usually three years), it is important for this experience to be successful. Unfortunately, some expatriates cannot adapt to the new situation (culture) and fail in their assignments. Why do people fail? According to Global Relation Services, the top reasons for expatriate failure are as follows: • Lowered security and safety, Lower quality of life, Job doesn’t meet expectations, Inability to adapt to new situation, Family concerns, and • Spouse/partner dissatisfaction.12 • • • • Running down the list, the reasons for failure are personal and not related to technical competence. China and India were the two countries that presented expatriates with the greatest challenge. Why do you think these two countries were singled out? What are some characteristics that human resource managers are looking for in the person who takes a foreign assignment? Patience, flexibility, openness to new experiences, and tolerance for other beliefs are among the top characteristics.13 Tips for successfully handling a foreign assignment include making sure that the family supports the foreign assignment, developing foreign language competencies, getting strong support from your manager, and making sure that your accomplishments are widely visible. Are women more likely to succeed or fail in expatriate assignments? A number of male leaders still think that women aren’t interested in overseas jobs or won’t be effective in them. These male managers typically perceive dual career issues, a presumed heightened risk of sexual harassment, and gender prejudices in many countries as reasons why their female employees often aren’t seriously considered for international assignments. In contrast, a recent survey of female expatriates and their managers revealed that women, on average, are just as interested as men in foreign assignments and every bit as effective once there.14 Indeed, some of the traits considered crucial for success overseas—such as knowing when to keep your mouth shut, being a strong team player, and soliciting a variety of opinions and perspectives when solving problems—are more often associated with women’s management styles than with men’s. Misinterpretation of the situation occurs when an individual gives certain meaning to observations and their relationships. Interpretation organizes our experience and guides our behavior. Read the following sentence and quickly count the number of Fs: FINISHED FILES ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF YEARS. Most people who do not speak English see all six Fs. By contrast, many English speakers see only three Fs; they do not see the Fs in the word of. Why? Because English-speaking people have learned that the word of is not important for overall understanding of the sentence. We selectively see those words that are important according to our cultural upbringing. A way to understand the norms and values of a culture is to pay attention to the behaviors that are rewarded in that society. The following Self Competency feature illustrates a sample of important behaviors that you should be aware of when conducting business in Arab countries.15 113 114 Part 2 The Individual in Organizations Self competency Doing Business in Arab Countries • • • • Greeting women. When greeting a female employee, never greet her with a kiss on the cheek. If the employee extends her hand to greet you, you may shake it; otherwise greeting with words is appropriate. Do not compliment your host on the beauty of his wife, sister, or daughter. Such statements will not be taken as compliments. Gift giving. When Arab businesspeople receive a gift, it is not customary to open it in front of the giver. Never give alcohol or products made out of pigs. Face concept. Saving face involves withholding one’s reactions to give the other party a way to exit the situation with minimal discomfort. It involves compromise, patience, and sometimes looking the other way to allow things time to get back to normal. Pressure sales tactics should be avoided because the Arab managers will associate you with an unpleasant experience. Dress. The majority of men wear a longsleeved, one-piece dress called a thoub that covers the entire body. This garment allows air • • • to circulate in hot summer days. Women dress conservatively in a garment called an abayah. This is a long black garment that covers a woman’s body from the shoulders down to her feet. Social duties. Managers perform a variety of social duties, including greeting an employee who returns from a trip, visiting an employee who is ill, bringing a gift to a newly wed couple, and visiting the husband and wife after the wife has delivered a new baby. Privacy. Privacy is important in Arabian societies. Therefore, houses and offices are built with walls that maintain privacy from others. People are not permitted to enter until the manager or host extends his right hand with his palm up saying “Tafaddal,” which means “Come in.” Social gatherings. Men and women may meet in separate rooms in some Arab countries. Men gather in rooms that are outside the main entrance of a home, away from the rest of the house. Women guests meet in a room inside the house and go through an entrance specifically assigned to female visitors. To learn more about Arab countries, go to www.montclair.edu/orgs/aso/arab6.html. Learning Goal 4. Describe the primary errors in perception that people make. Perceptual Errors The perceptual process may result in errors in judgment or understanding. An important part of understanding individual differences in perception is knowing the source of these errors. First, we examine the notion of accuracy of judgment in person perception. Then, we explore five of the most common types of perceptual errors: perceptual defense, stereotyping, the halo effect, projection, and impression management. Perceptual Accuracy How accurate are people in their perceptions of others? This question is important in organizational behavior. For example, misjudging the characteristics, abilities, or behaviors of an employee during a performance appraisal review could result in an inaccurate assessment of the employee’s current and future value to the organization. Another example of the importance of accurate person perception comes from the employment interview. Considerable evidence suggests that interviewers can easily make errors in judgment and perceptions when basing employment decisions on information gathered in face-to-face interviews. In fact, managers often make a decision about hiring a person within the first 10 minutes of an interview and spend the Chapter 4 Perceptions and Attributions remainder of the interview just confirming their first impressions.16 After reading the following types of errors, what are some types of errors that you have committed in the past few days? Similarity error. Interviewers tend to be positively predisposed toward job candidates • who are similar to them (in terms of background, interests, hobbies, jobs, and the like) and may be negatively biased against job candidates who are unlike them. • Contrast error. Interviewers have a tendency to compare job candidates to other candidates interviewed at about the same time, rather than to some absolute standard. For example, an average candidate might be rated too highly if preceded by several mediocre candidates. However, an average candidate might be scored too low if preceded by an outstanding applicant. • Overweighting of negative information. Interviewers tend to overreact to negative information as though looking for an excuse to disqualify a job candidate. • Race, gender, and age bias. Interviewers may be more or less positive about a candidate on the basis of the candidate’s race, gender, or age. First-impression error. The primacy effect may play a role in the job interview, because • some interviewers are quick to form impressions that are resistant to change. There are no easy answers to the general problem of ensuring perceptual accuracy. Some people accurately judge and assess others, and some people do so poorly. Some basic guidelines to make more accurate judgments include the following: (1) Avoid generalizing from an observation of a single trait (e.g., tactful) to other traits (e.g., stable, confident, energetic, dependable); (2) avoid assuming that a behavior will be repeated in all situations; and (3) avoid placing too much reliance on physical appearance. Your accuracy in person perception can be improved when you understand these potential biases. Perceptual Defense Perceptual defense is the tendency for people to protect themselves against ideas, objects, or situations that are threatening. A well-known folk song suggests that we “hear what we want to hear and disregard the rest.” Once established, an individual’s way of viewing the world may become highly resistant to change. Sometimes perceptual defense may have negative consequences. This perceptual error can result in a manager’s inability to perceive the need to be creative in solving problems. As a result, the manager simply proceeds as in the past even in the face of evidence that “business as usual” isn’t accomplishing anything. Stereotyping Stereotyping is the belief that all members of a specific group share similar traits and behaviors. The use of stereotypes can have powerful effects on the decisions that managers make. There are many exceptions to any stereotype. In a study of Fortune magazine’s top 500 CEOs, researchers found that CEOs are mostly white males. The study also found that on the average, male CEOs were almost six feet tall, which reflects a kind of implicit stereotype of the height of CEOs. Given that the average American male is five foot nine, it means that CEOs as a group are about three inches taller. In the United States, about 14.5 percent of all men are six feet or taller and 3.9 percent of white males are six foot two or taller. In this sample, almost a third were six foot two or taller. Furthermore, it was calculated that each inch of height is worth $789 a year in salary.17 That means an individual who is six feet tall, but otherwise identical to someone who is five foot five, will make on average $5,525 more per year. Over a career, the difference is hundreds of thousands of dollars. In another study, it was found that attractive people earn about 5 percent more than do average-looking employees, who in turn earn 9 percent more than plainlooking employees. Thus, if an average-looking college graduate starts at $47,000, 115 116 Part 2 The Individual in Organizations their good-looking friends start at $49,350, while their least attractive friends start at $42,770. Plain-looking employees may also receive fewer promotions than those awarded to their better looking colleagues.18 An interesting challenge for organizations is to determine in what ways female managers essentially are like their male counterparts. To the extent they are alike, gender differences should be only a marginal concern. Unfortunately, stereotyping exists in many retailing organizations. A federal judge has granted a class-action lawsuit against Costco on behalf of more than 700 female department managers. The suit claims the company has discriminated against women seeking promotion to store manager. A debate is raging in scientific and management circles around the world with regard to gender differences in thought, emotions, and information processing styles. Some research suggests that women are, on average, superior to men in many organizational roles. Such roles include communicating with customers or clients, facilitating discussions, and smoothing conflicts. With regard to the latter two roles, one study indicated that female project team leaders were more effective, on average, than males in leading cross-functional teams designed to foster high rates of innovation.19 Halo Effect The halo effect occurs when one positive or negative characteristic dominates the way that person is viewed by others. As we pointed out earlier, the evidence is clear that physical attractiveness and height are often such characteristics. It is hardly any wonder that Nordstrom’s, Dillard’s, Kohl’s, and other retail stores like to hire attractive salespeople. Their sales training programs include grooming hints to make their salespeople more attractive. The halo effect is based on general assessments of the overall person. That is, if the manager regards the person as “good,” that manager will tend to review that person’s performance in a positive way. In other words, a halo blinds the perceiver to other attributes that also should be evaluated to obtain a complete, accurate impression of the other person. Managers have to guard against the halo effect when rating employee performance. A manager may single out one trait and use it as the basis for judging all other performance measures. Students have been known to evaluate the overall effectiveness of a faculty member in just the first two seconds of the first class. The rankings they gave after these two seconds were almost identical to rankings made after sitting through the instructor’s course the entire semester. That’s the power of the halo effect. An important aspect of the halo effect is the self-fulfilling prophecy. The selffulfilling prophecy is the tendency for someone’s expectations about another to cause that individual to behave in a manner consistent with those expectations.20 Expecting certain things to happen shapes the behavior of the perceiver in such a way that the expected is more likely to happen. Self-fulfilling prophecies can take both positive and negative forms. In the positive case, holding high expectations of another tends to improve the individual’s performance, which is known as the Pygmalion effect. The Pygmalion effect has its roots in Greek mythology. According to mythology, Pygmalion was a sculptor who hated women yet fell in love with a statue he carved of a beautiful woman. He became so infatuated with the statue that he prayed to a goddess to bring her to life. The goddess granted him his wish. The essence of the Pygmalion effect is that people’s expectations determine their behavior or performance, thus serving to make their expectations come true. In other words, we strive to validate our perceptions of reality no matter how faulty they may be. Subordinates whose managers expect them to perform well do perform well. Subordinates whose managers expect them to perform poorly do in fact perform poorly. Obviously, this effect can be quite devastating.21 Some top executives believe that a manager who puts in long hours and works on Saturday is a better performer than those who do not put in these hours. Long hour expectations help create and foster a reward system that uses long hours as one criterion for a manager’s success. The Golem effect refers to the loss in performance that results from low expectations by the manager.22 If a manager notices that a subordinate’s sales reports are always late, this Chapter 4 Perceptions and Attributions 117 leads the manager to doubt whether the employee is committed to being a high achiever. This results in the manager watching the employee more closely, and the employee becoming afraid to make suggestions that could improve the sales report for fear of turning the report in late. The manager then interprets this as a lack of initiative. How can managers create positive performance expectations? We believe that managers need to consider three things: 1. 2. 3. Individuals behave toward others consistent with others’ expectations of them. Managers who have high expectations of their employees are supportive and generally give employees more training and challenging jobs. By contrast, managers who have low expectations of their employees aren’t supportive and generally won’t give employees training and challenging jobs. A person’s behavior affects others. Not only will those treated positively benefit from special opportunities, but these opportunities will also bolster their self-esteem. People behave in response to how they are treated. People who have benefited from special treatment and who have confidence in their abilities are likely to be high performers. Diversity Insight We must treasure openness in every single thing we do, from ideas to beliefs in people. We need to be positive Pygmalions for all of our diversity programs. George David, CEO, United Technologies Projection Projection is the tendency for individuals to see their own traits in other people. That is, the individual projects his or her own feelings, personality characteristics, attitudes, or motives onto others. For example, during the recession of 2008 and 2009 when the automobile and financial industries were in turmoil, people in other industries, such as education and entertainment, also assessed their jobs to be in more jeopardy than they actually were. Advertisers love to inform people when a product is the “fastest growing” or “largest selling” because they don’t have to convince consumers directly that the product or service is good. They need only to say that many others think so. Falsely believing that others share one’s beliefs can lead to poor performance. Projection may be especially strong for undesirable traits that perceivers possess but fail to recognize in themselves. The individual whose personality traits include stinginess, obstinacy, and disorderliness tends to rate others higher on these traits than does the individual who doesn’t have these personality traits. Impression Management Impression management is an attempt by an individual to manipulate or control the impressions that others form about them. This includes everything from how people talk to how they dress, and the hand gestures they use to how they walk.23 In Ecuador, you can hire a person or groups of people (called lloronas) to come to the funeral of a family member. The job of these people is to cry while the dead person is being buried, making sure that more people start to cry. Bartenders often put their own money in their tip jars at the beginning of the evening to give the impression to customers that others have tipped them. Evangelical preachers are known to seed their audience with ringers, who are rehearsed to come forward at a specified time to give witness and donations. Employees in organizations use several impression management tactics to affect how others perceive them. They are especially likely to use these tactics when talking with managers who have power over them and on whom they are dependent for raises, promotions, and good job assignments. Impression management is used by individuals at all organizational levels as they talk with suppliers, coworkers, managers, and others—and vice versa. To determine how much you rely on impression management tactics, take a moment to complete the self-assessment questionnaire in Table 4.2.24 118 Part 2 The Individual in Organizations TABLE 4.2 Impression Management Assessment To assess the impression tactics you use, please answer the following 22 questions using the following scale: How often do you behave this way? Never Occasionally Often 1 2 3 4 5 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Talk proudly about your experience or education. Make people aware of your talents. Let others know how valuable you are to the organization. Make people aware of your accomplishments. Compliment your colleagues so they will see you as likable. Take an interest in your colleagues’ personal lives to show them that you are friendly. Praise your colleagues for their accomplishments so they will consider you a nice person. Do personal favors for others to show them that you are friendly. Be pushy with coworkers when it will help you get your job done. Let others know you can make things difficult for them if they push you too far. Deal forcefully with others when they hamper your ability to get the job done. Deal aggressively with others who interfere in your business. Use intimidation to get others to behave appropriately. Act like you know less than you do so people will help you out. Try to gain sympathy from people by appearing needy in some areas. Pretend not to understand something to gain someone’s help. Act like you need assistance so people will help you out. Pretend to know less than you do so you can avoid an unpleasant assignment. Stay late so people will know you are working hard. Try to appear busy, even at times when things are slow. Arrive early to work to look dedicated. Come to the office at night or on weekends to show that you are dedicated. Scoring: To determine your impression management tactics, please add your answers to decide your score. Questions: 1–4 _________ 5–8 _________ 9–13 _________ 14–18 _________ 19–22 _________ This is your self-promotion score. The higher your score, the more likely you are to use this tactic. This is your ingratiation score. The higher your score, the more likely you are to use this tactic. This is your intimidation score.The higher your score, the more likely you are to use this tactic. This is your supplication score.The higher your score, the more likely you are to use this tactic. This is your exemplification score. The higher your score, the more likely you are to use this tactic. Source: Adapted from Bolino, M. C., and Turnley, W. H. Measuring impression management in organizations: A scale development based on Jones & Pittman taxonomy. Organizational Research Methods, 1999, 2, 187–206. Impression management involves the systematic manipulation of the perceptual process. The CEOs of Chrysler, Ford, and General Motors went to Congress in 2008 and 2009 to ask for financial support of their companies. The first time before Congress they arrived in separate private jets and were earning millions in salary and other benefits. These behaviors did not create the impression that their companies were in dire financial straits. Table 4.3 describes five common impression management tactics: self-promotion, ingratiation, intimidation, supplication, and exemplification. These five tactics can lead to either positive or negative perceptions depending on how the individual uses them. Individuals who are high in political skills have the ability to create better managerial impressions when they use these tactics frequently. On the other hand, Chapter 4 Perceptions and Attributions 119 TABLE 4. 3 Impression Management Tactics TACTIC DESCRIPTION EXAMPLE Self-promotion The person tries to present himself in a positive light Employee reminds boss about accomplishments Ingratiation The person flatters others so they will see the person as likable Intimidation The person lets others know that she can make life difficult for them if they push her The person acts like he needs help so others will help him Employee compliments manager on good customer service after the manager handled a complaint from an irate customer Employee tries to push others to get things done on schedule or else Employee asks for help on a task that he could perform himself The person stays late so others know she is working hard Employee is the last one to leave the parking lot and the first one to arrive Supplication Exemplification Source: Harris, K. J., Zivnuska, S., Kacmar, K. M., and Shaw, J. D. The impact of political skill on impression management effectiveness. Journal of Applied Psychology, 2007, 92, 278–285. individuals who use these impression management tactics but have low political skills are less likely to be viewed favorably and should instead avoid using them. Also, if superior performance evaluations are used to make key organizational decisions (e.g., pay raises, promotions, job assignments), there is a potential for employees to receive these outcomes because of their ability to use impression management tactics rather than more job-related criteria. Attribution Process A question often asked about others is “Why?” “Why did this engineer use these data in his report?” or “Why did Jim Sinegal, CEO and founder of Costco, start Costco?” Such questions are an attempt to get at why a person behaved in a particular way. The attribution process refers to the ways in which people come to understand the causes of their own and others’ behaviors.25 In essence, the attribution process reflects the person’s need to explain events through the deliberate actions of others rather than viewing them as random events. To maintain the illusion of control, the individual needs to create causal attributions for events. Attributions also play an important role in perceptions. Attributions made about the reasons for someone’s behavior may affect judgments about that individual’s basic characteristics (that is, what that person is really like). The attributions that employees and managers make concerning the causes of behavior are important for understanding behavior. For example, a leader who attributes poor performance directly to his subordinates tends to behave more punitively than does a leader who attributes poor performance to circumstances beyond his subordinates’ control. A manager who believes that an employee failed to perform a task correctly because he lacked proper training might be understanding and give the employee better instructions or more training. The same manager might be quite angry if she believed that the subordinate made mistakes simply because he didn’t try very hard. Responses to the same outcome can be dramatically different, depending on the attributions made about the reasons for that outcome. Table 4.4 lists some of the possible differences in managerial behavior when employees are perceived positively versus when they are perceived negatively. The relationships between attributions and behavior will become clearer as we examine the attribution process. Learning Goal 5. Explain how attributions influence behavior. 120 Part 2 The Individual in Organizations TABLE 4.4 Possible Results Stemming from Differences in Perceptions of Performance BOSS’S BEHAVIOR TOWARD BOSS’S BEHAVIOR TOWARD PERCEIVED STRONG PERFORMERS PERCEIVED WEAK PERFORMERS Discusses project objectives. Gives subordinate the freedom to choose own approach to solving problems or reaching goals. Gives specific directives when discussing tasks and goals. Treats mistakes or incorrect judgments as learning opportunities. Pays close attention to mistakes and incorrect judgments. Quick to emphasize what subordinate is doing wrong. Is open to subordinate’s suggestions. Solicits opinions from subordinate. Pays little attention to subordinate’s suggestions. Rarely asks subordinate for input. Gives subordinate interesting and challenging assignments. Gives subordinate routine assignments. May frequently defer to subordinate’s opinions in disagreements. Usually imposes own views in disagreements. Making Attributions The individual makes attributions in an attempt to understand why others behave as they do and to make better sense of their situations. An individual doesn’t consciously make attributions all the time (although he may do so unconsciously much of the time).26 However, under certain circumstances the individual is likely to make causal attributions consciously. For example, causal attributions are common in the following situations: • The perceiver has been asked an explicit question about another’s behavior. (Why did she do that?) • An unexpected event occurs. (I’ve never seen him behave that way. I wonder what’s going on?) • The perceiver depends on another person for a desired outcome. (I wonder why my manager made that comment about my expense account?) The perceiver experiences feelings of failure or loss of control. (I can’t believe I • failed my midterm exam!) Figure 4.3 presents a model for making attributions. The individual infers “causes” to behaviors that she observes in others. These interpretations often largely determine her reactions to those behaviors. The perceived causes of behavior reflect several antecedents: (1) the amount of information the perceiver has about the people and the situation and how that information is organized by the perceiver; (2) the perceiver’s beliefs (implicit personality theories, what other people might do in a similar situation, and so on); and (3) the motivation of the perceiver (e.g., the importance to the perceiver of making an accurate assessment). Recall our discussion of internal factors that influence perception—learning, personality, and motivation. These same internal factors influence the attribution process. The perceiver’s information and beliefs depend on previous experience and are influenced by the perceiver’s personality. Internal versus External Causes of Behavior In applying attribution theory, you should be especially concerned with whether a person’s behavior has been internally or externally caused. Internal causes are believed to be under an individual’s control—you believe that your website designer’s performance is poor because she is often late to work. External causes are believed to be beyond a person’s control—you believe that her performance is poor because Chapter 4 Perceptions and Attributions FIGURE 4. 3 The Attribution Process Antecedents — Factors internal to the perceiver • Information • Beliefs • Motivation Attributions made by the perceiver • Perceived causes of behavior (such as internal versus external causes) Consequences for the perceiver • Behavior • Feelings • Expectations her Windows operating system is old. According to attribution theory, three factors influence the determination of internal or external cause: • Consistency—the extent to which the person perceived behaves in the same manner on other occasions when faced with the same situation. If your website designer’s behavior has been poor for several months, you would tend to attribute it to an internal cause. If her performance is an isolated incident, you would tend to attribute it to an external cause. • Distinctiveness—the extent to which the person perceived acts in the same manner in different situations. If your website designer’s performance is poor, regardless of the computer program with which she’s working, you would tend to make an internal attribution; if her poor performance is unusual, you would tend to make an external attribution. • Consensus—the extent to which others, faced with the same situation, behave in a manner similar to the person perceived. If all the employees in your website designer’s team perform poorly, you would tend to make an external attribution. If other members of her team are performing well, you would tend to make an internal attribution.27 As Figure 4.4 suggests, under conditions of low consistency, high distinctiveness, and high consensus, the perceiver will tend to attribute the behaviors of the perceived to external causes. When consensus and distinctiveness are low, but consistency is high, the perceiver will tend to attribute the behaviors of the perceived to internal causes. For example, when all employees are performing poorly (high consensus), when the poor performance occurs on only one of several tasks (high distinctiveness), and the poor performance occurs only during the last week of the month (low consistency), a manager may attribute poor performance to an external source, such as peer pressure or an overly difficult task. In contrast, performance may be attributed to an employee (internal attribution) when only the individual in question is performing poorly (low consensus), when the inferior performance is found across several tasks (low distinctiveness), and when the low performance has persisted over time (high consistency). Other combinations of high and low consistency, distinctiveness, and consensus are possible. Some combinations may not provide the perceiver with a clear choice between internal and external causes. 121 122 Part 2 The Individual in Organizations FIGURE 4.4 Example of Attribution Process High Internal Consistency External Low High Behavior External Distinctiveness Internal Low High External Consensus Internal Low With regard to internal versus external causes of behavior, individuals often make what is known as the fundamental attribution error.28 The fundamental attribution error is the tendency to underestimate the influence of situational factors and to overestimate the influence of personal factors in evaluating someone else’s behavior. This error causes the perceiver to ignore important environmental factors that often significantly affect another person’s behavior. In organizations, employees may assign blame to other departments or individuals and fail to recognize the effect of the situation. For example, a CEO might attribute a high level of political behavior on the part of her vice presidents to aspects of their personalities, not recognizing that competition for scarce resources is causing much of the political behavior. Some cultural differences exist in the fundamental attribution error. For example, in North America, this type of error would be as just described (underestimating external causes and overestimating internal causes). In India, however, the more common attribution error is for a manager to overestimate situational or external causes for the observed behaviors. This difference in attributions may reflect the way that the individual views personal responsibility or perhaps differences in “average” locus of control beliefs in the different societies. The fundamental attribution error isn’t the only bias that can influence judgments concerning internal versus external causes of behavior. A study of supervisors showed that they were more likely to attribute effective performance to internal causes for Chapter 4 Perceptions and Attributions high-status employees. The supervisors were less likely to attribute success to internal causes for low-status employees. Similarly, supervisors were more likely to attribute ineffective performance to internal causes for low-status employees and less likely to attribute failure to internal causes for high-status employees.29 Perceptions of people and their behaviors are subjective. How others perceive events has important implications as the following Ethics Competency feature illustrates.30 Before reading any further, what is your perception of overseas factories, especially those in China, that manufacture clothing for JCPenney, Macy’s, Levi Strauss, and the Gap? Are these factories clean and well maintained? Are workers treated well? Are their products safe? How did you form these perceptions? The Gap, a $15.7 billion retailer, has issued a 42-page social responsibility report that spells out some of the problems found in operating garment factories in 60 countries around the world to produce clothes for the Gap, Old Navy, GapBody, GapKids, and Banana Republic. It found persistent wage, health, and safety violations in many factories. These violations ranged from failure to provide protective wear to physical abuse and coercion. The Gap pulled its business from more than 140 factories and turned down business from hundreds of others when they failed to meet the Gap’s labor standards. Ethics competency High worker turnover (more than 60 percent) is common in the apparel industry and is a significant contributor to production costs. The Gap found that good factory practices and better working conditions lead to these results: (1) Factories that treated their workers better had significantly lower turnover than those that treated their workers poorly, (2) factory managers who maintained close relationships and frequent communications with buyers tended to have better human resource management systems and experienced lower management turnover than those with limited buyer contact, and (3) a factory’s production efficiency declined by 16 percent for each 1 percent increase in monthly turnover. Armed with these data, the Gap’s vice president for social responsibility, Dan Henkle, took a variety of actions, three of which are discussed here. First, the Gap built an elaborate monitoring system with about 90 members who perform more than 8,500 factory inspections each year. The inspections have focused on working conditions, such as child or forced labor (prisoners), unrealistic production cycles, requiring employees to work more than 60 hours a week, and expecting employees to work unpaid overtime. IMAGEBROKER/ALAMY The Gap The Gap discovered that good factory practices and working conditions lead to positive results. As a result of the inspections, 136 factories were found in violation and dropped from the Gap’s supplier list. Second, the Gap outlined specific goals for each of its supplier factories to achieve. For example, in its Southern China plant, plant management redefined the role of sewing supervisors to focus on workers’ wages and operational efficiency as well as output. The result was a decrease of 99 percent in the 123 124 Part 2 The Individual in Organizations missing units from theft, a 9 percent decrease in worker turnover, a 35 percent reduction in overtime, and a 50 percent average increase in workers’ monthly pay. In India, the Gap added benefits like on-site child care and health care, as well as free meals. These have reduced turnover and improved productivity. Third, Henkle and his staff met with several labor-advocacy groups in an effort to clarify the Gap’s labor policies. To learn more about The Gap, to go www.gap.com. After reading this competency feature, did your perceptions of the Gap’s use of foreign manufacturers change? Attributions of Success and Failure JEFF GROSS/GETTY IMAGES The attributions that employees and leaders make regarding success or failure are very important. Leaders may base decisions about rewards and punishments on their perceptions of why subordinates have succeeded or failed at some task. In general, individuals often attribute their own and others’ success or failure to four causal factors—ability, effort, task difficulty, and luck31: • I succeeded (or failed) because I had the competencies to do the task (or because I did not have the competencies to do the task). Such statements are ability attributions. • I succeeded (or failed) because I worked hard at the task (or because I did not work hard at the task). Such statements are effort attributions. • I succeeded (or failed) because the task was easy (or because the task was too hard). Such statements are attributions about task difficulty. • I succeeded (or failed) at the task because I was lucky (or unlucky). Such statements are attributions about luck or the circumstances surrounding the task. Causal attributions of ability and effort are internal. Causal attributions of task difficulty and luck are external. These attributions about success or failure reflect differences in self-esteem and locus of control—personality dimensions discussed in Chapter 3. Accordingly, the self-serving bias refers to individuals attributing their success to internal factors (ability or effort) and attributing their failure to external factors (task difficulty or luck). For example, an individual with high self-esteem and high internal locus of control is likely to assess his own performance positively and to attribute his good performance to internal causes. The tendency of employees to accept responsibility for good performance but to deny responsibility for poor performance often presents a serious challenge for managers during performance appraisals.32 A self-serving bias may also create other types of problems. For example, it prevents individuals from accurately assessing their own performance and abilities and makes it more difficult to determine why a course of action has failed. The general tendency to blame others for a person’s own failures often is associated with poor performance and an inability to establish satisfying interpersonal relationships at work and in other social settings. In general, a version of the self-serving bias seems to operate when people are asked to compare themselves to others in the ▲ Tiger Woods' key to success relies on internal attribution processes. Chapter 4 Perceptions and Attributions work setting. That is, managers and employees often view themselves to be more ethical, more effective, better performing, and so on, than the “average” other person. One of the more traumatic events that can occur to anyone is being fired.33 Today losing a job doesn’t carry the stigma that it once did. But—it still hurts! Inevitably the person asks herself: What went wrong? What could I have done differently? And, perhaps most important: What am I going to do now? For most people, undertaking a job search at any time is always stressful. Undertaking a job search after suffering the psychological blow of being fired can be a formidable challenge for anyone. Suppose that you have just been fired. You can take certain constructive actions to increase your chances of success and even end up with a more satisfying job. All of these tips assume that you have not been fired for unethical behaviors, including theft, bullying, sexual harassment, and other issues. 1. Work through the firing psychologically. Emotionally, you might feel like hiding or taking a sabbatical. Experts suggest, however, that beginning the search for a new job immediately is crucial. The first contact or two may be hard, but the sooner you get started and the more people you talk to, the quicker you will find another position. Of course, reestablishing your normal good spirits may be either a long or slow process, depending on your ability to bounce back. Maintaining a sense of humor helps. Hal Lancaster, of the Wall Street Journal, suggests that “getting fired is nature’s way of telling you that you had the wrong job in the first place.” 2. Figure out what went wrong. This step is an important part of coming to grips, psychologically, with the situation. If you don’t understand what led to your being fired, you’re likely to repeat the same mistakes in the future. Moreover, you need to talk to your former employer, coworkers, and friends and seek honest feedback to help you understand your strengths and weaknesses. Doing so may well be difficult. Many firms’ human resource professionals prefer to say as little as possible at the time of dismissal in order to minimize lawsuits. If you can’t get insights from your former employer, experts suggest utilizing a career counselor to help you make the same evaluation. 3. Work with your former employer to develop an exit statement. If possible, you should have something in writing from your former employer that will be an asset in your job search. Specific suggestions include having a paragraph that describes what you accomplished in your former job followed by a paragraph that explains why you are no longer with the firm. There are lots of “socially acceptable” reasons that can be given in such a document: a change in management style, a change in strategy, the desire to pursue interests that no longer fit what the employer wants, and so on. Surprisingly, the fired employee can often get a former manager or a senior manager to sign such a document. Managers often want to be helpful, and if such a request is approached in a constructive, problem-solving manner, many times the former manager is willing to help create a letter or other document that does not condemn the company or you. This approach has the advantage of creating a situation where prospective future employers hear the same “story” from both the former employer and you. 4. Avoid negative attributions as part of your explanation. Experts say that you should never say anything bad about your former employer. Don’t make excuses, don’t trash the people you used to work for, and don’t blame everything on others. Focus on the positive aspects of any written understanding that you have obtained. Accept responsibility for both your failures and successes. Quickly move the discussion to the future, stressing what you’ve learned from previous jobs and focusing on what you can do for a new employer. 125 126 Part 2 The Individual in Organizations Chapter Summary 1. Describe the major elements in the perceptual process. 2. Identify the main factors that influence what the individual perceives. 3. Identify the factors that determine how one person perceives another. 4. Describe the primary errors in perception that people make. Perception is the psychological process whereby the individual selects information from the environment and organizes it to make sense of his world. Environmental stimuli are observed, selected, organized, interpreted, and responded to as a result of the perceptual process. Understanding the two major components of this process— selection and organization—is particularly important. Perceptual selection is used to filter out less important information in order to focus on more important environmental cues. Both external factors in the environment and factors internal to the perceiver influence perceptual selection. External factors (i.e., size, motion) can be thought of as characteristics of the event. These influence whether the event is likely to be noticed. Internal factors include personality, learning, and motivation. How the individual perceives another is particularly important for organizational behavior. Person perception is a function of the characteristics of the person perceived, the characteristics of the perceiver, and the situation within which the perception takes place. Individuals may go to great lengths to manage the impressions that others form about them. The perceptual process may result in errors of judgment or understanding in various ways. The more important and common perceptual errors include perceptual defense, stereotyping, the halo effect, projection, and impression management. However, through training and experience, individuals can learn to judge or perceive others more accurately. 5. Explain how attributions Attribution deals with the perceived causes of behavior. Individuals infer causes to influence behavior. understand the behavior of others. Their perceptions of why certain behaviors occur influence their own subsequent behaviors and feelings. Whether behavior is internally caused by the nature of the individual or externally caused by circumstances over which the individual has little control has important implications for leaders. Individuals also make attributions concerning task success and failure that have important implications for organizational behavior. Key Terms and Concepts Attribution process, 119 Expatriates, 113 Feng shui, 106 Fundamental attribution error, 122 Golem effect, 116 Halo effect, 116 Implicit personality theory, 111 Impression management, 117 Perception, 104 Perceptual defense, 115 Perceptual set, 110 Person perception, 111 Pollyanna principle, 110 Projection, 117 Pygmalion effect, 116 Selective screening, 107 Self-fulfilling prophecy, 116 Self-serving bias, 124 Stereotyping, 115 Discussion Questions 1. Go to www.google.com and enter “Jim Sinegal.” Scroll down until you find “ABC News: Costco CEO Finds Pro-Worker Means Profitability.” What is your perception of him? 2. The individual forms perceptions of how ethical principles are portrayed in organizations through the behaviors of leaders, advertisements, news stories, and the like. Go to the Gap’s website (www.gap.com). What Chapter 4 3. 4. 5. attributions can you make about their ethical principles from visiting this website? Review the Communication Competency feature showing different hand gestures on page 109. Do you use any of these gestures? How might these be interpreted by people in different countries? What are your scores on the Impression Management Assessment questionnaire in Table 4.2? Based on these, how might the overuse of any tactic backfire on you and hurt your career advancement? If you take an assignment with an organization in a foreign country, what are some of the perceptual errors that you should avoid to complete the assignment successfully? Perceptions and Attributions 127 6. Give three examples of the halo effect that you have observed personally. 7. Give an example of a situation in which you attributed someone’s behavior to internal or external factors. What influenced your attribution? 8. Describe an important task at which you failed. Describe a second important task at which you succeeded. Identify the attributions that you made to explain your failure and your success. 9. Provide two real examples of the Pygmalion effect. 10. Which stereotypes do you believe are most widely held by leaders in organizations? Why? Experiential Exercise and Case Experiential Exercise: Self Competency The Perception Process 34 The Perception Process Questionnaire (PPQ) is designed to help you evaluate your current level of perceptual skills. If you do not have experience in a management-level position, consider a project you have worked on either in the classroom or in an organization such as a fraternity, sorority, club, church, or service group. You will find that the statements are applicable to your own experience even if you are not yet a manager. Use the following scale to rate the frequency with which you perform the behaviors described in each statement. Place the corresponding number (1–7) in the blank space preceding the statement. 1 Rarely 2 Irregularly 3 Occasionally 4 Usually 5 Frequently 6 Almost Always 7 Consistently _____ 1. I search for verified facts and observations to support inferences or conclusions. _____ 2. I examine available information related to my area of job responsibility. _____ 3. I note organizational changes and policies that might affect my information. _____ 4. I ask others for their opinions and observations to get access to more information. _____ 5. I note inconsistencies and seek explanations for them. _____ 6. I look at information in terms of similarities and differences. _____ 7. I generate possible explanations for available information. _____ 8. I check for omissions, distortions, or exaggerations in available information. _____ 9. I verbally summarize data that are not completely quantified (e.g., trends). _____ 10. I distinguish facts from opinions. _____ 11. I am aware of my own style of approaching problems and how this might affect the way I process information. _____ 12. I put quantitative information in tables, charts, and graphs. _____ 13. I am aware of the personality characteristics of my peers, colleagues, subordinates, and superiors. _____ 14. I am aware of my own biases and value systems that influence the way I see people. _____ 15. I am aware of patterns of people’s performance and how these patterns might indicate characteristics. _____ 16. I recognize differences and similarities among people. _____ 17. I actively seek to determine how pieces of information might be related. _____ 18. I relate current information to past experiences. _____ 19. I relate my own attitudes and feelings and those of others to job performance. _____ 20. I relate work methods to outcomes. PPQ Evaluation The PPQ Evaluation (see page 128) shows scoring lines for your total score and for each behavioral area measured on the PPQ. Each line shows a continuum from the lowest possible score to the highest. Place a B (before practice) where your personal score falls on each of these lines. The score lines in the PPQ Evaluation show graphically where you stand with regard to five areas of perception. If you have been honest with yourself, you now have a better idea of your relative strengths and weaknesses in the categories of behavior that make up perception skills. 128 Part 2 The Individual in Organizations PPQ Scoring Sheet Behavioral Area Statements Searching for information 1, 2, 3, 4 Interpreting and comprehending information 5, 6, 7, 8 Determining essential factors 9, 10, 11, 12 Recognizing characteristics of people 13, 14, 15, 16 Identifying relationships 17, 18, 19, 20 Score Questions 1. What competencies need to be further developed to improve your perceptual skills? 2. Have your scores affected your communications with others? Explain. TOTAL SCORE Case: Self Competency Joan Murphy35 Instructions Joan Murphy is a computer engineering programmer for the aerospace division of Lockheed Martin Company. Please read the case and then identify the causes of her behavior by answering the questions following the case. Then determine whether you made an internal or external attribution. After completing the task, decide on the appropriateness of various forms of corrective action. A list of potential recommendations has been developed. The list is divided into four categories. Read each action, and evaluate its appropriateness by using the scale provided. Next, compute a total score for each of the four categories. The Case Joan Murphy, 42, received her baccalaureate degree in aerospace engineering from a school in the Northeast. She graduated with a 3.4 GPA and had a minor in international relations. During the summer between her junior and senior years, she took an internship with Texas Instruments in Japan. Immediately upon graduation, she took a permanent position with Lockheed Martin and was assigned to its Fort Worth, Texas, jet fighter division. Joan is currently working in the aerospace engineering department as a senior engineer. During the past year, she has missed 12 days of work. She seems unmotivated and rarely has her assignments completed on time. Joan is usually given the harder engineering designs to work on because of her technical competency. Past records indicate Joan, on average, completes programs classified as “routine” in about 45 hours. Her coworkers, on the other hand, complete “routine” programs in an average time of 32 hours. Further, she finishes programs considered “major problems,” on average, in about 115 hours. Her coworkers, however, finish these same “major problems” assignments, on average, in about 100 hours. When she has worked in engineering teams, her peer performance reviews are generally average to marginal. Her peers have noted she is not creative in attacking problems and she is difficult to work with. The aerospace engineering department recently sent a questionnaire to all customers to evaluate the usefulness and accuracy of its designs. The results indicate many departments are not using its designs because they cannot understand the reports. It was also determined that many customers found Joan’s work unorganized and they could not use her work unless someone redid it. Causes of Performance To what extent was each of the following a cause of Joan’s performance? Use the following scale: a. High ability b. Low ability c. Low effort d. Difficult job e. Unproductive coworkers f. Bad luck Very Little 1 2 1 2 1 2 1 2 1 2 1 2 3 3 3 3 3 3 Very Much 4 5 4 5 4 5 4 5 4 5 4 5 1 3 4 2 5 Internal attribution (total score for causes a, b, and c) _________ External attribution (total score for causes d, e, and f) _________ Appropriateness of Corrective Action Evaluate the following courses of action by using the scale below: Very Inappropriate Very Appropriate 1 2 3 4 5 Chapter 4 Coercive Actions a. Reprimand Joan for her performance. 1 2 3 4 5 b. Threaten to fire Joan if her performance does not improve. 1 2 3 4 5 Change Job c. Transfer Joan to another job. 1 2 3 4 5 d. Demote Joan to a less demanding job. 1 2 3 4 5 Coaching Actions e. Work with her to help her do the job better. 1 2 3 4 5 f. Offer her encouragement to help her improve. 1 2 3 4 5 No Immediate Actions g. Do nothing. 1 2 3 4 5 h. Promise her a pay raise if she improves. 1 2 3 4 5 Perceptions and Attributions 129 Compute a score for the four categories: Coercive actions = a + b = _____ Change job = c + d = _____ Coaching actions = e + f = _____ No immediate actions = g + h = _____ Questions 1. What is your evaluation of Joan’s performance in terms of consistency, distinctiveness, and consensus? 2. Do you attribute Joan’s performance to internal or external causes? What is the rationale for your decision? 3. Which of the four types of corrective actions do you think is most appropriate? Explain. chapter 5 Learning Concepts to Improve Performance Learning Goals After studying this chapter, you should be able to: 1 Explain the role of classical and operant conditioning in fostering learning. 2 Describe the contingencies of reinforcement that influence behavior. 3 Explain how positive reinforcement, negative reinforcement, punishment, and extinction affect an individual’s performance. 4 Describe how social learning theory can be used by individuals to improve their performance. Learning Content Learning from Experience Working at United Parcel Service Learning Through Rewards and Punishments Contingencies of Reinforcement Self Competency Coming to Work Today? Ethics Competency Time Off for Bad Behavior Schedules of Reinforcement Across Cultures Competency Flowers: A Symbol of Love? Social Learning Theory Teams Competency Steelcase Inc. Experiential Exercise and Case Experiential Exercise: Self Competency What Is Your Self-Efficacy? Case: Self Competency Joe Salatino, President of Great Northern American Learning from Experience Working at United Parcel Service MARK DUNCAN/AP PHOTO With revenues of more than $49.7 billion dollars, 425,300 employees worldwide, and 1,800 locations, UPS is the world’s largest package-delivery company. UPS transports 16 million packages and documents per business day throughout the United States and to more than 200 countries and territories. Its delivery operations use a fleet of about 100,000 motor vehicles and nearly 600 aircraft. How does UPS deliver? Service providers are trained to perform their tasks over and over again without wasted effort. Veteran service providers earn $29 per hour and can earn more with overtime. They are told to keep the DIAD (Delivery Information Acquisition Device) under the right arm and the package under the left. Keys are on the pinky finger. They are told to look at the package only once to fix the address in their mind. They walk to the customer’s place of business or home at three feet a second. The service provider’s left foot should hit the truck’s first step. They are told to put their seat belt on with their left hand, while at the same time turning on the ignition with their right hand. During an average day, a service provider will make about 100 stops to deliver 246 packages and pick up 70 others. Each service provider participates in hours and hours of classroom and on-the-road training during which they learn the Five Seeing Habits: (1) Look down the road to uncover traffic patterns, (2) maintain the proper following distance, (3) constantly keep your eyes on the road, (4) make To learn more about UPS, go to www.ups.com. sure that the truck has an escape route, and (5) communicate in traffic with your horn, lights, and signals. Those service providers who use these Five Seeing Habits effectively are rewarded with T-shirts, free lunches, and the like. United Parcel Service gives its supervisors personal digital assistants (PDAs) to use in onroad driver evaluations. The PDAs are equipped with proprietary software that standardizes the evaluation process, helping to ensure that each driver review is as objective as possible. “Our supervisors do ride-alongs to see if the service provider is following procedures and adhering to our health and safety policies,” says Cathy Callagee, vice president of applications development for UPS’s operations portfolio. “But this was problematic because supervisors used to have to write notes on paper, and then bring their notes back to the office and type them into reports.” Paper is eliminated with the help of PDAs, which display a series of checklists for the 132 Part 2 The Individual in Organizations supervisor to use during the evaluation. The checklists guide the supervisors through a list of duties the service provider should be performing. The supervisor simply checks off each duty as the service provider completes it. Additionally, the checklists are uniform across the UPS network, so each service provider receives the same evaluation, regardless of who is conducting the review. The PDAs identify training needs to help make service providers safer and provide better customer service. The PDAs permit the supervisor to immediately reward an employee for excellent service with a congratulatory note. The PDAs also serve as a remote office, allowing supervisors to receive e-mail and check the status of other activities while they are on the road with drivers. “Supervisors can now electronically write how their drivers are doing and [whether] they are following procedures,” Callagee says. “If [they’re] not, the supervisor can bring the applied methods right up on the PDA and walk the driver through it.”1 Companies in all industries are recognizing the importance of customer satisfaction and how the quality of frontline customer service providers can make or break a company. Turnover and competition are pushing organizations to focus on ways to keep top-quality employees satisfied and motivated. A recent survey conducted by WorldatWork found that recognition and reward programs remain a top priority for all managers.2 As you read in the feature on UPS, managers have in place opportunities to recognize and reward good performance. UPS asks service providers, via surveys and team meetings, what they value most in terms of recognition and rewards and then designs their motivational program around these employee expectations and values. UPS also knows that unless there is a consistent way to track and recognize superior performance, such motivational programs lose their effectiveness. UPS managerial practices are based on specific principles drawn from an area of psychology called learning. Learning is a relatively permanent change in knowledge or observable behavior that results from practice or experience.3 Desirable work behaviors contribute to achievement of organizational goals; conversely, undesirable work behaviors hinder achievement of these goals. Labeling behavior as desirable or undesirable may be somewhat subjective and depends on the value systems of the organization (most often represented by an employee’s leader) and the employee exhibiting the behavior. For example, a service provider at UPS who returns late from lunch exhibits undesirable behavior from the supervisor’s viewpoint, desirable behavior from the viewpoint of friends with whom the worker chats during the break, and desirable behavior from the worker’s viewpoint because of the satisfaction of social needs. Employees quickly learn whether their behavior is desirable or undesirable based on the leader’s reaction to the behavior, and also learn how to change an undesirable to a desirable (from the leader’s viewpoint) behavior. Usually, however, the work setting and organizational norms provide objective bases for determining whether a behavior is desirable or undesirable. The more a behavior deviates from organizational expectations, the more undesirable it is. At UPS, undesirable behavior includes anything that results in lost packages and late or missed deliveries. Expectations about behavior vary considerably from one organization to another. For example, at Microsoft’s research and development laboratory, engineers and scientists are encouraged to question top management’s directives because innovation and professional judgment are crucial to the organization’s success. Effective leaders do not try to change employees’ personalities or basic beliefs. As we pointed out in Chapters 3 and 4, an individual’s personality, emotions, and perceptual processes influence his behavior and directly influencing those traits is often difficult, if not impossible. Rather, effective leaders focus on identifying observable employee behaviors and the environmental conditions that affect these behaviors. They then attempt to influence external events in order to guide employee Chapter 5 Learning Concepts to Improve Performance 133 behaviors—to help employees learn and exhibit desirable behaviors. In this chapter, we explore three major concepts of learning: classical conditioning, operant conditioning, and social learning theory. Each theory proposes a different way by which people learn, but focusing on observable behaviors is common to all three. Learning Through Rewards and Punishments Employees need to learn and practice productive work behaviors. Learning new work assignments often depends on many factors. The leader’s task, then, is to provide learning experiences in an environment that will simplify the learning process and promote the employee behaviors desired by the organization. For learning to occur, some types of behavioral change are required. In the sterile processing department at Children’s Hospital in Denver, Colorado, good attendance is critical. Absenteeism impacts the entire department because the work must get done regardless, so team members have to pick up the slack for their missing colleagues. To encourage perfect attendance, staff members who have not missed work in the previous three months are announced at the department’s meetings. Various rewards are handed out, such as ribbons, perfect attendance pins, prizes, tote bags, alarm clocks, and the like. As an added incentive, the individual with the longest record of perfect attendance is allowed to choose first from the list of “gifts.” In addition, each quarter a list of employees who have not missed any days of work is posted in the staff lounge along with the length of their perfect attendance. If the entire department has perfect attendance for a quarter, the whole department celebrates with events like an ice cream social or root beer float party to acknowledge everyone’s efforts and accomplishments.4 Classical Conditioning Classical conditioning is the process by which individuals learn to link the information from a neutral stimulus to a stimulus that causes a response. This response may not be under an individual’s conscious control.5 In the classical conditioning process, an unconditioned stimulus (environmental event) brings out a natural response. Then a neutral environmental event, called a conditioned stimulus, is paired with the unconditioned stimulus that brings out the behavior. Eventually, the conditioned stimulus alone brings out the behavior, which is called a conditional response. The individual most frequently associated with classical conditioning is Ivan Pavlov, the Russian physiologist whose experiments with dogs led to the early formulations of classical conditioning theory. In Pavlov’s famous experiment, the sound of a metronome (the conditioned stimulus) was paired with food (the unconditioned stimulus). The dogs eventually exhibited a salivation response (conditioned response) to the sound of the metronome alone. The classical conditioning process is illustrated in Figure 5.1. The classical conditioning process helps explain a variety of behaviors that occur in everyday organizational life. At Presbyterian Hospital’s emergency room in Plano, Texas, special lights in the hallway indicate that a patient who needs treatment has just arrived. Nurses and other hospital staff report that they feel nervous when the lights go on. In contrast, at a recent luncheon in the dining room at Stonebriar Country Club in Frisco, Texas, Ralph Sorrentino, a partner at Deloitte Consulting, was thanked by his friend Jack Kennedy for suggesting a new personnel performance evaluation system. When Sorrentino dines in the dining room, he remembers that recognition and feels good. Some organizations spend millions of dollars on advertising campaigns designed to link the information value of a stimulus to customers’ purchasing behaviors. In a TV ad, AFLAC has successfully created a link between its duck and supplemental Learning Goal 1. Explain the role of classical and operant conditioning in fostering learning. 134 Part 2 The Individual in Organizations FIGURE 5.1 Classical Conditioning Unconditioned stimulus (food) Reflex response (salivation) Conditioned stimulus (metronome) insurance. The duck is the unconditioned stimulus, and insurance is the conditioned stimulus. The positive feelings that buyers have toward the duck are associated with insurance, which AFLAC hopes will lead people to buy its products. Classical conditioning isn’t widely used in work settings. Employee behaviors usually don’t include responses that can be changed with classical conditioning techniques. Instead, there is greater interest in the voluntary behaviors of employees and how they can be changed via operant conditioning. Operant Conditioning The individual most closely linked with operant learning is B. F. Skinner.6 He coined the term operant conditioning to refer to a process by which individuals learn voluntary behavior. Voluntary behaviors are called operants because they operate, or have some influence, on the environment. Learning occurs from the consequences of behaviors, and many employee work behaviors are operant behaviors. In fact, most behaviors in everyday life (e.g., talking, walking, reading, or working) are forms of operant behavior. Leaders are interested in operant behaviors because they can influence the results of such behaviors. For example, the frequency of an employee behavior can be increased or decreased by changing the results of that behavior. The crucial aspect of operant conditioning is what happens as a consequence of the behavior. The strength and frequency of operantly conditioned behaviors are determined mainly by consequences. Thus, leaders and team members must understand the effects of different types of consequences on the task behaviors of employees. For example, at Virgin Life Care in Boston, Massachusetts, the company’s rewards program motivated 40 percent of its more than 940 employees to establish a habit of walking up stairs instead of taking the elevator. Thanks to the program, employees reduced their body fat by 68 percent, saving the company money in terms of decreased medical claims and reduced absenteeism.7 In operant conditioning, a response is learned because it leads to a particular consequence (reinforcement), and it is strengthened each time it is reinforced. The success of Denver’s Children’s Hospital motivational program to encourage perfect attendance relies on rewarding behavior (perfect attendance) or not rewarding behavior when individual calls in sick. At school, you’ve probably learned that if you study hard, you are likely to receive good grades. If you keep up with your reading throughout the semester, you can more easily cope with the stress of finals week. Thus, you’ve learned to operate on your environment to achieve your desired goals. Chapter 5 Learning Concepts to Improve Performance Contingencies of Reinforcement Learning Goal A contingency of reinforcement is the relationship between a behavior and the preceding and following environmental events that influence that behavior. A contingency of reinforcement consists of an antecedent, a behavior, and a consequence. An antecedent precedes and is a stimulus to a behavior. Antecedents are instructions, rules, goals, and advice from others that help individuals to know which behaviors are acceptable and which are not and to let them know the consequences of such behaviors. At UPS, service providers are trained on how to deliver a package. Antecedents play an essential educational role by letting service providers know in advance the consequences (rewards) of different behaviors. A consequence is the result of a behavior, which can be either positive or negative in terms of goal or task accomplishment. A leader’s response to an employee is contingent on the consequence of the behavior (and sometimes on the behavior itself, regardless of consequence). The consequence for service providers at UPS is delivering all their packages on time and going home on time. The consequence for staff members of the sterile processing department at Children’s Hospital who have perfect attendance for the quarter is that they receive tote bags, their name is posted in the break room, etc. Figure 5.2 shows an example of contingent reinforcement. First, the employee and leader jointly set a goal (e.g., selling $100,000 worth of equipment next month). Next, the employee performs tasks to achieve this goal (e.g., calling on four new customers a week, having regular lunches with current buyers, and attending a two-day training program on new methods of selling). If the employee reaches the sales goal, the leader praises the employee—an action contingent on achievement of the goal. If the employee fails to reach the goal, the leader doesn’t say anything or reprimands the employee. The contingency of reinforcement concept involves three main types of contingencies. First, an event can be presented (applied) or withdrawn (removed), contingent on employee behavior. The event also may be positive or aversive. Positive events are desirable, or pleasing, to the employee. Aversive events are undesirable, or displeasing, to the employee. Figure 5.3 shows how these events can be combined to produce four types of contingencies of reinforcement. It shows whether a particular type of contingency 2. Describe the contingencies of reinforcement that influence behavior. FIGURE 5.2 Examples of Contingent Reinforcement NO Manager and employee set goal Manager is silent or reprimands employee Does employee achieve goal? YES Antecedent (precedes the behavior) Behavior 135 Consequence (result of the behavior) Manager compliments employee for accomplishment Reinforcement Contingent on Consequence 136 Part 2 The Individual in Organizations FIGURE 5. 3 Types of Contingencies of Reinforcement Pleasant Event Unpleasant Event Event Is Added Event Is Removed Positive reinforcement Extinction Punishment Negative reinforcement is likely to increase or decrease the frequency of the behavior. This figure also is the basis for the following discussion of contingencies of reinforcement. Reinforcement is a behavioral contingency that increases the frequency of a particular behavior that it follows. Whether positive or negative, reinforcement always increases the frequency of the employee behavior. If you want a behavior to continue, you must make sure that it is being reinforced. In contrast, extinction and punishment always decrease the frequency of the employee behavior. Positive Reinforcement Positive reinforcement entails presenting a pleasant consequence after the occurrence of a desired behavior (see Figure 5.3). A leader might reward an employee’s behavior that is desirable in terms of achieving the organization’s goals. Catherine Collins took a cup of coffee to Bobbie Watson and then discussed the improved quality of her work. Bobbie’s work continued to improve (positive reinforcement). Reward versus Reinforcement The terms reinforcement and reward are often confused in everyday usage. A reward is an event that an individual finds desirable or pleasing. An individual’s culture influences whether a reward acts as a reinforcer.8 For example, praise and appreciation of employees in family-dominated cultures such as Greece, Italy, and South Korea may mean just as much to the recipient as money. Certain material rewards can also carry unexpected consequences. In China, for example, cashiers and clerks at Walmart and Sam’s typically earn between 1500 and 2500 RMB per month (roughly $200 to $300). This is a competitive wage in China. In addition, Walmart distributes food to employees as holiday gifts and gives them a housing allowance. Employees in higher positions get more and better food and housing than lower level workers.9 To qualify as a reinforcer, a reward must increase the frequency of the behavior it follows. Money can be regarded as a positive reinforcer for a particular individual only if the frequency of the desired behavior (in this case, high performance) increases. Chapter 5 Learning Concepts to Improve Performance 137 A reward doesn’t act as a reinforcer if the frequency of the behavior decreases or remains unchanged. Primary and Secondary Reinforcers A primary reinforcer is an event for which the individual already knows the value. Food, shelter, and water are primary reinforcers. However, primary reinforcers don’t always act as reinforcers, given a particular situation. For example, food may not be a reinforcer to someone who has just completed a five-course meal. In organizations, secondary reinforcers influence most behaviors. A secondary reinforcer is an event that once had neutral value but has taken on some value (positive or negative) for an individual because of past experience. Money is an obvious example of a secondary reinforcer. Although it can’t directly satisfy a basic human need, money has value because an individual can use it to purchase both necessities and discretionary items. Calvert, a Bethesda, Maryland, financial firm, groups its secondary reinforcers into three categories: • core benefits, such as life insurance, sick leave, holiday pay, and a retirement savings plan; • optional benefits, such as dental and eye care coverage, and spending accounts for health and dependent care; and • other benefits, such as tuition reimbursement, car pooling, and career planning. At Costco, employees are offered challenging jobs and participate in the management of their own jobs. Management teaches employees quality control techniques so that they can monitor their own behavior, learn to control costs, and assume responsibility for tasks traditionally viewed as managerial prerogatives. Costco also provides employees with health and education benefits, flexible working arrangements, maternity/paternity leave, and child and elder care. It also sponsors social events for employees. Does it work? Costco employees, on average, earn $31,000 per year and receive an additional $7,065 in benefits, whereas the average Sam’s Club employee earns $24,680 per year with $4,247 in benefits. Yet the labor costs at Costco are actually lower because Costco’s employees generated roughly twice the revenue ($72 versus $39.7 billion) as did Sam’s Club’s employees—and Costco did it with thousands of fewer employees. When the costs of turnover, employee theft, and productivity are considered, it is more efficient for Costco to pay its employees more. For more information on Costco and its leaders, see Chapter 4.10 David Stoner, president of ViewCast Corporation, has discovered that when people are given a choice of things to do, whatever they consistently choose can be used as a secondCommunication Insight ary reinforcer. In fact, you are invited to make a list of all the tasks that you need to do in the next two days. Rank these from Encouraging positive behavior takes much things you most want to do or enjoy doing to the tasks you least less effort on a leader’s part than having like to do. Then start working at the bottom of the list. You will to address poor performance issues. I try quickly notice that when you start at the bottom, every time to give out five positive comments for you finish a task, the next one on the list is more desirable. If every one negative one to reinforce good you start at the top of your list, the consequence of completing performance. that task is that the next one is more undesirable, difficult, or Jack Gustin, President, Lakewood Hospital boring. Using this approach, you quit. Starting from the bottom and working to the top, you don’t want to quit until all tasks are done. The nation’s 300 largest employers estimate that unscheduled absenteeism costs their business more than $760,000 per day in direct payroll costs and even more when lower productivity, lost revenue, and the effects of poor morale are considered. The following Self Competency feature illustrates how JCPenney designed a positive reinforcement system to tackle this problem.11 138 Part 2 The Individual in Organizations Self competency Coming to Work Today? SUSAN GOLDMAN/BLOOMBERG NEWS/LANDOV On any given day, about 1,500 JCPenney Company employees do not show up for work at one of the company’s more than 11,000 stores— with a costly result. And in recessionary times when profits are slim, that’s a cost that most leaders do not want to incur. In an effort to cut down on unscheduled absenteeism, JCPenney implemented a program that is staffed by a team of employees to work on this problem. If an employee is sick and cannot come to work for more than three days, the employees must call Penney’s PowerLine team. The team determines the type of benefit, if any, the employee can receive. The team notifies the leader of the department where the employee works and sends the employee the necessary forms to complete. The PowerLine team follows up with absent employees until they return to work. JCPenney has created a PowerLine team to follow up with absent employees. Jim Cuva, Penney’s benefit leader, learned that when individuals check on the person to see how they are doing, it shows the individual that someone cares and is thinking about them. The PowerLine team also discovered that only a third of all absences were related to an illness. The rest of the times absences were related to having to be somewhere else or the individual just didn’t feel like going to work. They also found that authoritarian leaders who make employees feel it’s “their way or the highway” created more absences than leaders who make employees feel important. They recommended leadership development programs for these leaders in an effort to educate them on the consequences of their autocratic leadership style. Finally, the PowerLine team, working with a consultant, designed a survey to find out whether a job applicant might have a problem with absences. Some of the questions that they ask job applicants to either agree or disagree with include: • I have asked a friend to punch my time card when I knew I was going to be late for work. • It’s okay to say you’re sick and go home if you don’t feel like working. • It’s okay to get around rules, as long as you don’t actually break them. The PowerLine team uses these and other questions to understand the applicant’s character. The team has learned that if the individual is not going to be satisfied at work, they’re more likely to be absent. To learn more about JCPenney’s PowerLine, go to www.jcpenney.com. Concepts of Positive Reinforcement Several general principles influence the effectiveness of positive reinforcement. The following general principles help to explain optimum reinforcement conditions12: • The principle of contingent reinforcement states that the reinforcer must be administered only if the desired behavior is performed. A reinforcer administered when the desired behavior has not been performed is ineffective. • The principle of immediate reinforcement states that the reinforcer will be most effective if administered immediately after the desired behavior has occurred. This is Chapter 5 • • Learning Concepts to Improve Performance what supervisors at UPS do. The more time that elapses after the behavior occurs, the less effective the reinforcer. The principle of reinforcement size states that the larger the amount of reinforcer delivered after the desired behavior, the more effect the reinforcer will have on the frequency of the desired behavior. The amount, or size, of the reinforcer is relative. A reinforcer that may be significant to one person may be insignificant to another person. Thus, the size of the reinforcer must be determined in relation both to the behavior and the individual. ARAMARK, a supplier of food services to college campuses, gives T-shirts to workers with perfect attendance for a month and a $50 gift certificate to those with perfect attendance for a semester. The principle of reinforcement deprivation states that the more an individual is deprived of the reinforcer, the greater effect it will have on the future occurrence of the desired behavior. However, if an individual recently has had enough of a reinforcer and is satisfied, the reinforcer will have less effect. Organizational Rewards Material rewards—salary, bonuses, fringe benefits, and the like—are obvious. Most leaders also offer a wide range of other rewards to reinforce the behaviors they want. For example, the Dallas Independent School System recently spent more than $12 million on substitute teachers. The average teacher was absent 10 days during the school year. The district launched its Staff and Teacher Attendance Reward program as a financial incentive for teachers to show up for class. According to Marita Hawkins, the district’s benefits director, if a teacher had only one absence during the school year, the district matched 100 percent of the teacher’s contribution to a retirement account, up to $1,000 a year. Teachers out two days got a 75 percent match, up to $700. Those with three to five absences earned 50 percent match, up to $500 a year. Hawkins hopes to save the district more than $2 million with this reward system.13 At Toyota’s Camry assembly plant in Georgetown, Kentucky, management rewards employees for kaizens. A kaizen is a suggestion that results in safety, cost, or quality improvements.14 The awards are distributed equally among all members of a team. The awards aren’t cash payments; rather, they are gift certificates redeemable at local retail stores. Toyota learned that an award that could be shared by the employees’ families was valued more than extra money in the paycheck. These awards instill pride and encourage other teams to scramble for new ideas in the hope that they, too, will receive them. In addition, self-administered rewards are important. For example, self-satisfaction for accomplishing a particularly difficult assignment can be an important personal reinforcer. Table 5.1 contains an extensive list of organizational rewards. Remember, however, that such rewards will act as reinforcers only if the individuals receiving them find them desirable or pleasing. Negative Reinforcement Negative reinforcement (see Figure 5.3) occurs when an unpleasant event that precedes the employee behavior is removed when the desired behavior occurs. Negative reinforcement increases the likelihood that the desired behavior will occur. Negative reinforcement is sometimes confused with punishment because both use unpleasant events that influence behavior. Negative reinforcement is used to increase the frequency of a desired behavior. In contrast, punishment is used to decrease the frequency of an undesired behavior. On NBC’s TV show The Biggest Loser, the station agreed to pay $250,000 to the individual who lost the biggest percentage of his or her body weight. In the primetime reality show, unless a contestant lost 15 pounds in two months, the show would air unflattering photos of them on TV. Cynthia Nacson-Schechter explained that she knew all about the dangers of being overweight and yet these dangers and the money weren’t enough to scare her into losing weight. What she feared most was 139 140 Part 2 The Individual in Organizations TABLE 5.1 Rewards Used by Organizations MATERIAL REWARDS SUPPLEMENTAL BENEFITS STATUS SYMBOLS Pay Pay raises Stock options Profit sharing Deferred compensation Bonuses/bonus plans Incentive plans Expense accounts Company automobiles Health insurance plans Pension contributions Vacation and sick leave Recreation facilities Child-care support Club privileges Parental leave Corner offices Offices with windows Carpeting Drapes Paintings Watches Rings Private restrooms SOCIAL/INTERPERSONAL REWARDS REWARDS FROM THE TASK SELF-ADMINISTERED REWARDS Praise Developmental feedback Smiles, pats on the back, and other nonverbal signals Requests for suggestions Invitations to coffee or lunch Wall plaques Sense of achievement Jobs with more responsibility Job autonomy/self-direction Performing important tasks Self-congratulation Self-recognition Self-praise Self-development through expanded knowledge/skills Greater sense of self-worth the possibility that her ex-boyfriend would see her in a bikini on national TV. She lost weight and then some. It was the fear of being on national TV in a bikini that acted as a negative reinforcer for her to lose weight. Leaders and team members frequently use negative reinforcement when an employee hasn’t done something that is necessary or desired. For example, air-traffic controllers want the ability to activate a blinking light and a loud buzzer in the cockpits of planes that come too close to each other. Air-traffic controllers wouldn’t shut these devices off until the planes moved farther apart. This type of procedure is called escape learning because the pilots quickly learn to move their planes away from each other to escape the light and buzzer. Escape learning refers to an unpleasant event that occurs until an employee performs a behavior or terminates it. In most instances, use of negative reinforcements generates enough behavior to escape or avoid punishment. Doing “just enough to get by” is typical. Extinction Extinction is the removal of all reinforcing events. Whereas reinforcement increases the frequency of a desirable behavior, extinction decreases the frequency of an undesirable behavior (see Figure 5.3). Leaders use extinction to reduce undesirable employee behaviors that prevent achievement of organizational goals. The extinction procedure consists of three steps: 1. 2. 3. identifying the behavior to be reduced or eliminated, identifying the reinforcer that maintains the behavior, and stopping the reinforcer. Extinction is a useful technique for reducing and eventually eliminating behaviors that disrupt normal workflow. For example, a team reinforces the disruptive behavior Chapter 5 Learning Concepts to Improve Performance of a member by laughing at it. When the team stops laughing (the reinforcer), the disruptive behavior will diminish and ultimately stop. Extinction can be regarded as a failure to reinforce a behavior positively. In this sense, the extinction of behaviors may be accidental. If leaders fail to reinforce desirable behaviors, they may be using extinction without recognizing it. As a result, the frequency of desirable behaviors may inadvertently decrease. Some leaders think that doing nothing has no effect on performance. When leaders do nothing following a behavior, they change the contingencies of reinforcement. If employees are taking the initiative to go beyond what is required, those behaviors will stop if they are not reinforced. If employees are taking shortcuts in areas of safety and quality and nothing is said, then extinction will cause the undesirable behaviors to continue. Punishment Punishment (see Figure 5.3) refers to an unpleasant event occurring following a behavior and decreasing that behavior’s frequency. Remember when you tried to use a PC for the first time? You may have inadvertently deleted a document you had been working on for hours (punishment). If that happened, now you probably hit the “Save” option regularly. As in positive reinforcement, a punishment may include a specific antecedent that cues the employee that a consequence (punisher) will follow a specific behavior. A positive contingency of reinforcement encourages the frequency of a desired behavior. In contrast, punishment decreases the frequency of an undesired behavior. To qualify as a punisher, an event must decrease the undesirable behavior. Just because an event is thought of as unpleasant, it isn’t necessarily a punisher. The event must actually reduce or stop the undesired behavior before it can be defined as a punisher. Organizations typically use several types of unpleasant events to punish employees. Material consequences for failure to perform adequately include a cut in pay, a disciplinary suspension without pay, a demotion, or a transfer to a dead-end job. The final punishment is the firing of an employee for failure to perform. In general, organizations reserve the use of unpleasant material events, such as demotions, reassignments, dismissals, and the like, for cases of serious behavior problems. Interpersonal punishers are used extensively. They include a leader’s oral reprimand of an employee for unacceptable behavior and nonverbal punishers such as frowns, grunts, and aggressive body language. Certain tasks themselves can be unpleasant. The fatigue that follows hard physical labor can be considered a punisher, as can harsh or dirty working conditions. However, care must be exercised in labeling a punisher. In some fields and to some employees, harsh or dirty working conditions may be considered as just something that goes with the job. Three of the principles of positive reinforcement discussed earlier have equivalents in punishment. For maximum effectiveness: • a punisher should be directly linked to the undesirable behavior (principle of contingent punishment); • the punishment should be administered immediately (principle of immediate punishment); and, • in general, the greater the size of the punisher, the stronger the effect on the undesirable behavior (principle of punishment size). Negative Effects of Punishment A criticism for using punishment is the chance that it will have negative effects, especially over long or sustained periods of time.15 Punishment stops an undesirable employee behavior. However, the potential negative consequences may be greater than the original undesirable behavior. Figure 5.4 illustrates some potential negative effects of punishment, as discussed next. 141 142 Part 2 The Individual in Organizations FIGURE 5.4 Potential Negative Effects of Punishment Recurrence of undesirable employee behavior Undesirable emotional reaction Antecedent Undesirable employee behavior Punishment by manager Short-term decrease in frequency of undesirable employee behavior Which tends to reinforce But leads to long-term Aggressive, disruptive behavior Apathetic, noncreative performance Fear of manager High turnover and absenteeism Punishment may cause undesirable emotional reactions. An employee who has been reprimanded for staying on break too long may react with anger toward the leader and the organization. Such reactions may lead to behavior detrimental to the organization. Sabotage, for example, may be a result of a punishment-oriented management system. Chapter 8 discusses aggressive behavior in the workforce more completely. Punishment frequently leads only to short-term suppression of the undesirable behavior, rather than to its elimination. The suppression of an undesirable behavior over a long period of time usually requires continued and, perhaps, increasingly severe punishment. Another problem is that control of the undesirable behavior becomes contingent on the leader’s presence. When the leader isn’t around, the undesirable employee behavior is likely to recur. In addition, the punished individual may try to avoid or escape the situation. From an organizational viewpoint, this reaction may be unacceptable if an employee avoids a particular, essential task. High absenteeism is a form of avoidance that may occur when punishment is used frequently. Quitting may be the employee’s final form of escape. Organizations that depend on punishment are likely to have high rates of employee turnover. Some turnover is desirable, but excessive turnover is damaging to an organization. Todd Diener, president of Chili’s at Brinker International based in Dallas, Texas, says that recruitment and training costs average more than $600 per employee at Chili’s restaurants. Punishment suppresses employee initiative and flexibility. Reacting to punishment, many an employee has said: “I’m going to do just what I’m told and nothing more.” Chapter 5 Learning Concepts to Improve Performance 143 Such an attitude is undesirable because organizations depend on the personal initiative and creativity that employees bring to their jobs. Overusing punishment produces apathetic employees who are not an asset to an organization. Sustained punishment can also lead to lower self-esteem. Lower self-esteem, in turn, undermines the employee’s self-confidence, which is necessary for performing most jobs (see Chapter 3). Punishment produces a conditioned fear of management. That is, employees develop a general fear of punishment-oriented leaders. Such leaders become an environmental cue, indicating to employees the probability that an aversive event will occur. So if operations require frequent, normal, and positive interaction between employees and a leader, such a situation can quickly become intolerable. Responses to fear, such as “hiding” or reluctance to communicate with a leader, may well hinder employee performance. A leader may rely on punishment because it can produce fast results in the short run. In essence, the leader is reinforced for using punishment because the approach produces an immediate change in an employee’s behavior. Thus, the leader may ignore punishment’s long-term detrimental effects, which can be cumulative. A few incidents of punishment may not produce negative effects. The long-term, sustained use of punishment most often results in negative outcomes for the organization. Individuals have also learned how to “game” the situation to avoid the punisher as the following Ethics Competency feature illustrates.16 Ethics competency Time Off for Bad Behavior Samuel Waksal, former CEO of the biotech firm ImClone, was serving time in a federal prison for insider trading. He was released nine months early. Why? He was rewarded for participating in a prison rehab program for substance abusers. The rehab program is a 500-hour program focusing on behavioral and cognitive treatments, during which time participants are housed in a dorm-like unit set apart from the general prison population. The problem was that he was not a substance abuser. Waksal told the probation officer and judge that he was a “social drinker” and that he had never been treated for alcohol addiction. In prison, he learned from his fellow inmates that in 1994, Congress passed a law offering up to 12 months off a sentence for nonviolent offenders if they complete a counseling program for alcohol addiction. In 1994, only 3,755 inmates were in the program, but in 2008, there were more than 18,000 prisoners in the program, with a waiting list of more than 7,000. The rehab program is so attractive to prisoners that it is now a big business. For a fee of up to $5,000, lawyers advise their clients how to get into the program and how to maximize their chances of getting a reduction in their sentence. For example, one lawyer advised his clients to show up drunk on the day of their sentencing so they get interviewed right away about their substance abuse problem. They also arrange for doctors to testify, for a consulting fee, that they purportedly treated the individual for alcohol abuse. Drug-dealer-turned celebrity chef Jeff Henderson wrote in his book, Cooked, that even though he never used drugs and hadn’t been around them since he stopped selling them, he was admitted to the program. While the Bureau of Prisons has rigid eligibility requirements designed to keep out fakers, there are no rigid standards on what constitutes substance abuse. Despite its problems, the program has had some societal benefits. Male inmates who have participated in the program are 16 percent less likely to commit another crime and 15 percent less likely to relapse into future drug abuse. 144 Part 2 The Individual in Organizations Effective Use of Punishment Positive reinforcement is more effective than punishment over the long run, but effectively used punishment does have an appropriate place in management. The most common form of punishment in organizations is the oral reprimand. It is intended to diminish or stop an undesirable employee behavior. An old rule of thumb is “Praise in public; punish in private.” Private punishment establishes a different type of contingency of reinforcement than public punishment. A private reprimand can be constructive and informative. A public reprimand is likely to have negative effects because the employee has been embarrassed in front of her peers. Vague and general oral reprimands should not be given about behavior and especially not about a so-called “bad attitude.” An effective reprimand pinpoints and specifically describes the undesirable behavior to be avoided in the future. It focuses on the target behavior and avoids threatening the employee’s self-image. The effective reprimand punishes specific undesirable behavior, not the employee. Behavior is easier to change than the employee. Punishment (by definition) trains an employee in what not to do, not in what to do. Therefore, a leader must specify an alternative behavior to the employee. When the employee performs the desired alternative behavior, the leader must then reinforce that behavior positively. Finally, a leader should strike an appropriate balance between the use of pleasant and unpleasant events. The absolute number of unpleasant events isn’t important, but the ratio of pleasant to unpleasant events is. A good rule of thumb is that this ratio should be 5 to 1: five positive reinforcements to one punishment. When a leader primarily uses positive reinforcement, an occasional deserved punishment can be quite effective. However, if a leader never uses positive reinforcement and relies mostly on punishment, the long-run negative effects are likely to counteract any short-term benefits. Positive management procedures should dominate in any well-run organization. Insights for Leaders For a positive reinforcer to cause an employee to repeat a desired behavior, it must have value to that employee. If the employee is consistently on time, the leader or team leader positively reinforces this behavior by complimenting the employee. What happens if the employee has been reprimanded in the past for coming to work late and then reports to work on time? The leader or team leader uses negative reinforcement and refrains from saying anything. Why? The employee is expected to come to work on time. What happens if the employee continues to come to work late? The leader or team leader can use either extinction or punishment to try to stop this undesirable behavior. The team leader who chooses extinction doesn’t praise the tardy employee but simply ignores the employee. The use of punishment may include reprimanding, fining, or suspending—and ultimately firing—the employee if the behavior persists. The following guidelines are recommended for using contingencies of reinforcement in the work setting: Do not reward all employees in the same way. • Carefully examine the consequences of nonactions as well as actions. • Let employees know which behaviors will be reinforced. • Let employees know what they are doing wrong. • Don’t punish employees in front of others. • Make the response equal to the behavior by not cheating workers out of their just rewards.17 Can global leaders use these guidelines to motivate employees? BMW’s factory located in Oxford, England, produces one of the company’s new products, its 7 series.18 The factory has seen big changes from a few years ago, when Rover owned the factory. Then the buildings were crumbling and the plant was often half-empty. After acquiring the Rover factory, the first challenge for BMW was modernizing the facilities. • Chapter 5 Learning Concepts to Improve Performance 145 They installed the newest production technology, expanded the parking lot, created more appealing landscapes, and in other ways created a more pleasant work environment. As employee Bernard Moss explained, “We had an open day for old employees and they just couldn’t believe the transformation of the plant.” The improvements were badly needed, but they were costly, too. For the plant to become profitable, productivity had to improve. BMW relies on the factory workers themselves to find ways to cut costs and boost output. To motivate their employees and align their efforts with the needs of BMW, leaders and union leaders designed a new pay system. It offers all employees an annual bonus of £260 (approximately $400) for their ideas. To receive the full bonus, each employee must come up with an average of three ideas, and the ideas must save an average of £800 (about $1,200). Other changes were also made in the way employees were paid. Under the old system, when production stopped and employees didn’t come to work, they were paid anyway. When the plant was extra busy, they earned overtime pay. Now, when the plant is closed, employees are paid, but there is a new twist. Employees make up the time by putting in extra hours when needed. When things are busy, employees are expected to put in longer hours. Instead of overtime pay, they build up an account of extra time off. Each week quality reports are posted in a plaza that employees pass on their way to lunch. Employees are made aware of any quality problems. The employees resented the new pay arrangements at first, but now they like it. According to Moss, “they [employees] are starting to see the advantages of longer holidays.” Today the plant is even more productive than BMW leaders had hoped for. Employees offered more than 10,000 ideas for improvements, saving the company £6 million ($7.79 million). “If people are highly satisfied, they are more likely to be productive. If they are not satisfied, they are not going to bother [making] suggestions,” says Moss. Schedules of Reinforcement Leaders using reinforcement to encourage the learning and performance of desired behaviors must choose a schedule for applying reinforcers. The schedule of reinforcement often depends on practical considerations (e.g., the nature of the person’s job and the type of reinforcer being used, deliberately or not). However, reinforcement is always delivered according to some schedule. Continuous and Intermittent Reinforcement Continuous reinforcement means that the behavior is reinforced each time it occurs and is the simplest schedule of reinforcement. An example of continuous reinforcement is dropping coins in a soft-drink vending machine. The behavior of inserting coins is reinforced (on a continuous schedule) by the machine delivering a can of soda (most of the time!). Verbal recognition and material rewards generally are not delivered on a continuous schedule in organizations. In organizations such as Mary Kay Cosmetics, Tupperware, and Amway, salespeople are paid a commission for each sale, usually earning commissions of 25 to 50 percent of sales. Although the reinforcer (money) isn’t paid immediately, the salespeople track their sales immediately and quickly convert sales into amounts owed them by the organization. Most leaders, however, supervise employees other than salespeople, and they seldom have the opportunity to deliver a reinforcer every time their employees demonstrate a desired behavior. Therefore, behavior typically is reinforced intermittently. Intermittent reinforcement refers to a reinforcer being delivered after some, but not every, occurrence of the desired behavior. Intermittent reinforcement can be subdivided into (1) interval and ratio schedules and (2) fixed and variable schedules. In an interval schedule, reinforcers are delivered after a certain amount of time has passed. In a ratio schedule, reinforcers are delivered after a certain number of behaviors have been performed. These two schedules can be further subdivided into fixed (not changing) or variable (constantly changing) schedules. Figure 5.5 shows these four primary types of intermittent schedules: fixed interval, variable interval, fixed ratio, and variable ratio. Learning Goal 3. Explain how positive reinforcement, negative reinforcement, punishment, and extinction affect an individual’s performance. 146 Part 2 The Individual in Organizations FIGURE 5. 5 Four Types of Intermittent Reinforcement Schedules Interval Fixed Variable Ratio Fixed Interval Fixed Ratio • reinforcer given after a given period of time • reinforcer given after a number of behaviors Variable Interval Variable Ratio • reinforcer given after a random number of behaviors • reinforcer given at random times Time based Behavior based Fixed Interval Schedule In a fixed interval schedule, a constant amount of time must pass before a reinforcer is provided. The first desired behavior to occur after the interval has elapsed is reinforced. For example, in a fixed interval, one-hour schedule, the first desired behavior that occurs after an hour has elapsed is reinforced. Administering rewards according to this type of schedule tends to produce an uneven pattern of behavior. Prior to the reinforcement, the behavior is frequent and energetic. Immediately following the reinforcement, the behavior becomes less frequent and energetic. Why? Because the individual rather quickly figures out that another reward won’t immediately follow the last one—a certain amount of time must pass before it is given again. A common example of administering rewards on a fixed interval schedule is the payment of employees weekly, biweekly, or monthly. That is, monetary reinforcement comes regularly at the end of a specific period of time. Such time intervals, unfortunately, are generally too long to be an effective form of reinforcement for newly acquired work-related behavior. Males typically send flowers to their significant other on Valentine’s Day as an expression of their love, devotion, and appreciation. However, as the following Across Cultures competency feature illustrates, sending the right flowers is not as easy as it seems. What color flowers are sent can be seen as either a reward or punisher. Do you remember what the color was of the flowers you sent on Valentine’s Day last year?19 Across Cultures competency Flowers: A Symbol of Love? According to FTD and Interflora Inc., which send flowers by wire to some 140 countries, the color red is used to cast spells in Mexico, and a white bouquet is necessary to lift the spell. In Spain, red roses are associated more with lust than with love. In France, a dozen yellow roses are inappropriate—yellow suggests infidelity—and cut flowers by the dozen or any even number are unlucky. A bouquet of yellow flowers is also inappropriate in Latin America where yellow is associated with death rather than infidelity. In Africa, yellow is associated with disease. In India, sending green flowers is associated with bad luck. In Italy, roses serve as tokens of affection when they are sent in odd numbers to women. In Japan, on the other hand, men receive flowers from women. White is an appropriate color for a wedding gown in the United States, yet white is used alternatively with black for mourning in India, Hong Kong, and Japan. Americans see red when they are angry, but red is a lucky color for the Chinese. It is customary for the Chinese to put money in red envelopes as gifts for employees and children on special occasions, especially on the Chinese New Year’s Day. White flowers are used in China as a symbol of mourning. Learning Concepts to Improve Performance BUCKY_ZA/DREAMSTIME.COM Chapter 5 Although red flowers mean love in U.S. culture, they have other meanings across the globe. To learn more about flowers, go to www.teleflora.com. Variable Interval Schedule A variable interval schedule represents changes in the amount of time between reinforcers. Sherry Burnside, head of housekeeping at Presbyterian Hospital in Dallas, Texas, uses a variable interval schedule to observe and reinforce the behaviors of housekeeping personnel. An individual receives $100 for perfect attendance and a score above 92 percent on 23 performance indicators (e.g., floor swept, trash baskets emptied, room dusted, etc.). To observe their behavior, Burnside announced to all housekeeping employees that, during the month, she would make seven inspections at random times. During the first week, she observed and recorded the performance of employees on Tuesday between 3:00 and 4:00 p.m. and Wednesday from 6:00 to 7:30 a.m. The following week, she made no observations. During the third week, she observed employees on Monday between 10:00 and 11:00 a.m. and Friday from 12:00 to 1:45 p.m. During the fourth week, she observed employees on Monday between 8:00 and 9:00 p.m. and from 11:00 p.m. to 12:00 a.m. and on Thursday from 2:00 to 3:30 p.m. If she didn’t change her schedule, the employees would anticipate her tours and adjust their behaviors to get a reward. Fixed Ratio Schedule In a fixed ratio schedule, the desired behavior must occur a specified number of times before it is reinforced. Administering rewards under a fixed ratio schedule tends to produce a high response rate when the time for reinforcement is close, followed by periods of steady behavior. The employee soon determines that reinforcement is based on the number of responses and performs the responses as quickly as possible in order to receive the reward. The individual piece-rate system used in many manufacturing plants is an example of such a schedule. In the Northern Shipping Company in China, production workers are paid on the basis of pieces. The firm allocates a number of hours per job and assigns a unit price to each piece. The number of hours allocated to each job is reviewed from time to time according to whether production targets are being met. The workers are paid 9.6 RMB (or US $1.24) per piece. Workers can 147 148 Part 2 The Individual in Organizations complete several pieces per hour. If the job is completed on time to the required quality standard, workers will receive the full amount for the job. The norm for production workers is to work 176 hours per month, but many work up to 250 hours per month. An average production employee can earn 2,500 to 3,000 RMB per month.20 Variable Ratio Schedule In a variable ratio schedule, a certain number of desired behaviors must occur before the reinforcer is delivered, but the number of behaviors varies around some average. Leaders frequently use a variable ratio schedule with praise and recognition. For example, team leaders at Alcatel vary the frequency of reinforcement when they give employees verbal approval for desired behaviors. Gambling casinos, such as Bally’s and Harrah’s, and state lotteries use this schedule of reinforcement to lure patrons to shoot craps, play poker, feed slot machines, and buy lottery tickets. Patrons win, but not on any regular basis. A variable ratio schedule is effective because it creates uncertainty about when the consequence will occur. The use of this schedule makes sense for giving praise or auditing the behavior of employees. Employees know that a consequence will be delivered, but not when. To avoid consequences of either punishment or extinction, the employee keeps demonstrating the desired behaviors. Pioneer Telephone Cooperative of Kingfisher, Oklahoma, was facing severe competition from other telephone and cable companies, such as AT&T, Cingular, and Time Warner.21 The firm’s leaders had developed the idea of a triple play—high-speed Internet, phone service, and TV service—all from one company. Pioneer needed its sales representatives to sell this new service to its customers. The triple play provided customers with advanced video services, including pay-per-view, high-definition programming, and gaming. With only 600 employees and a little more than $100 million in sales, Pioneer is a small fish in a big pond dominated by major companies. So how does Pioneer get new subscribers? All employees at Pioneer are salespeople. Employees refer qualified leads to the company via Pioneer’s intranet. A lead is qualified when employees, on their own time, recommend the triple play to customers and ask them to contact them at work. Employees are rewarded for each successful lead; bonuses are deposited in their company accounts and paid each quarter. Pioneer periodically offers double points for leads. To ensure that all employees are aware of the triple play, each month they receive a computer-based learning module. Each topic is designed to be an interactive experience. Employees read the information and answer 10 questions. Those who correctly answer at least 90 percent of the questions received $5. Pioneer also introduced an e-billing service. It offered a free T-shirt to the first 100 employees who enrolled in the program to learn about its e-billing service. Pioneer used the same type of reinforcement program to get customers involved in the triple play. Called Take 5–Win $25, this program required customers to read the information in the company’s newsletter, answer five questions, and send it back to Pioneer with a chance to win $25. Each month, one winner is drawn from each of Pioneer’s 13 districts. Several thousand customers participated in a chance to win $25. Loyd Benson believes that rewarding employees to promote Pioneer achieves four things: It (1) educates employees about Pioneer’s products and services, (2) increases sales through solid leads, (3) reduces sales expenses, and (4) makes employees ambassadors for the company. Table 5.2 summarizes the four types of intermittent reinforcement schedules. The ratio schedules—fixed or variable—usually lead to better performance than do interval schedules. The reason is that ratio schedules are more closely related to the occurrence of desired behaviors than are interval schedules, which are based on the passage of time. The particular schedule of reinforcement is not as critical as the fact that reinforcement is based on the performance of desired behaviors. Chapter 5 Learning Concepts to Improve Performance 149 TABLE 5.2 Comparison of Reinforcement Schedules SCHEDULE Fixed interval Fixed ratio Variable interval Variable ratio INFLUENCE ON PERFORMANCE Leads to average performance Leads quickly to high and stable performance Leads to moderately high and stable performance Leads to very high performance EXAMPLE Monthly paycheck Piece-rate pay Occasional praise by team members Random quality checks with praise for zero defects Social Learning Theory Learning Goal 4. Describe how social Operant conditioning accurately describes some of the major factors that may influlearning theory can be used by ence learning. Certain aspects of learning, however, are not addressed by operant individuals to improve their conditioning. For example, an individual’s feelings and thoughts aren’t considered. performance. Albert Bandura and others have demonstrated that people can learn new behavior 22 by watching others in a social situation and then imitating their behavior. Social learning theory refers to knowledge acquisition through the mental processing of information by observing and imitating others. The social part acknowledges that individuals learn by being part of a society, and the learning part recognizes that individuals use thought processes to make decisions. People actively process information to learn. By watching others perform a task, people develop mental pictures of how to perform the task. Observers often learn faster than those who do not observe the behaviors Change Insight of others because they don’t need to unlearn behaviors and can As CEO of ViewCast, a major part of avoid needless and costly mistakes that often accompany trialmy job is to teach employees how to and-error learning. ask interesting questions and pose new Social learning theory includes five dimensions—symbolizing, solutions to how we do business. forethought, vicarious learning, self-control, and self-efficacy—as shown in Figure 5.6. These five dimensions can help explain why David Stoner, CEO, ViewCast Corporation different employees may behave differently when facing the same situation. Symbolizing Symbolizing is the process of creating a mental image to guide an individual’s behavior. People imitate parents, friends, teachers, heroes, and others because they can identify with them. If a golfer observes the swings of Tiger Woods or Anika Sorenstam on their web pages, this observation creates an image (symbol) in that individual’s mind of what a good golf swing looks like. Such images or symbols help the person swing a golf club the next time he plays golf. In a social situation, when those at the head of the table at a formal dinner begin to eat, their actions let the other diners know that starting to eat now is appropriate. Forethought Forethought refers to the individual planning his or her actions based on the level of performance he or she desires. For example, when a golfer who has watched an instructional video of Woods or Sorenstam getting out of a sand trap approaches the same type of shot, she recalls what she learned in the video. As a result, she adjusts her hands, feet, and body posture to the correct playing position to hit the shot. She anticipates where the ball will land and mentally plans her next shot. 150 Part 2 The Individual in Organizations FIGURE 5.6 Five Dimensions of Social Cognitive Theory Symbolizing Forethought Vicarious Learning Self-Control Self-Efficacy Employees process visual experiences into cognitive models that serve to guide their behavior. Employees plan their actions, anticipate consequences, and determine the levels of desired performance. Employees observe others’ performance and the consequences of their performance. Employees control their own performance by comparing it to their own performance standards. Employees are confident that they can do a task. Source: Adapted from Stajkovic, A. D., and Luthans, F. Social cognitive theory and self-efficacy. Organizational Dynamics, Spring 1998, 65. Reprinted with permission. Vicarious Learning Vicarious learning refers to the individual observing the behavior of others and the consequences of that behavior. Individuals learn what works and what doesn’t work by watching others and studying what happens to them. Employees’ capacity to learn by observation enables them to obtain accurate information without having to perform these behaviors through trial and error. All self-help videos rely on vicarious learning. For vicarious learning to occur, several conditions must be met: • The learner must observe the other person—the model—when the behavior is being performed. • The learner must accurately perceive the model’s behavior. • The learner must remember the behavior. • The learner must have the competencies necessary to perform the behavior. • The learner must observe that the model receives rewards for the behavior.23 Self-Control Not everyone is cut out to work as a flight attendant, salesperson, construction worker, or leader. Many people never apply for particular jobs because what they see isn’t consistent with their own ideas of the type of job they want. Self-control refers to the individual selecting his or her own goals and ways of reaching them to learn new behaviors. Tina Potter, an administrative assistant at Southern Methodist University, had a new software package for graphics on her desk for a month. She knew that she had to learn how to use it even though her leader hadn’t put any pressure on her to do so. She worked Saturdays on her own to learn this new technique. Potter’s goal was to learn to use the graphics software to produce figures for this book—which she achieved. Her approach exhibited self-control. Most people engage in self-control to learn behaviors both on and off the job. Mundane tasks (e.g., learning how to use e-mail) and more complex tasks (e.g., preparing a subordinate’s performance appraisal) can be learned. When an employee learns through self-control, leaders don’t need to be controlling because the employee takes responsibility for learning and performing the desired behaviors. In fact, if a leader exercises control, it may well be redundant and counterproductive. Chapter 5 Learning Concepts to Improve Performance In recent years, the use of teams, especially self-directed teams, has taken the business world by storm. In many cases, management continues to exert too much direct control over teams. As a result, members then have few opportunities to apply self-control to their tasks. For most teams to be effective, leaders must empower their members to make decisions. Empowerment means giving employees the authority, skills, and self-control to perform their tasks.24 The following Teams Competency feature highlights how Steelcase Incorporated, a Minnesota manufacturer of business furniture, empowers teams to improve productivity.25 Teams competency For 18 years, Jerry Hammond had been a spot welder, making parts of business furniture without even knowing the employees in nearby departments by name. Now, he knows his coworkers because they are a team responsible for deciding how to manufacture a part and for running as many as six different pieces of equipment. Team members are cross-trained, as time permits, during their regular shifts. Often team members stay after their shifts to watch how other employees perform certain operations. When Steelcase’s leaders decided to create teams and empower its employees, it realized that barriers between workers and leaders would have to be removed. As a result, only customers now have reserved parking spaces. A common cafeteria is used by all employees and only a few walls remain in the plant. Whenever new equipment is needed, a team of employees who are responsible for running the equipment make the decision about what to buy and how it should be installed on the shop floor. A group of employees visits the manufacturer of the equipment to learn firsthand how to use it. They are encouraged to watch videotapes provided by the manufacturer for quality and service guidelines. Forty-one self-directed production teams and four support teams tackle day-to-day problems, such as JACK HOLLINGSWORTH/PHOTODISC/GETTY IMAGES Steelcase Inc. Steelcase’s implementation of teams has made workers 45 percent more productive than their competitors’ workers. waste, scrap, paint quality, shipping, and discipline. As a result, Steelcase has only one supervisor for every 33 workers, compared to a ratio of one to 12 for a competitor. Steelcase’s workers are 45 percent more productive than its competitors, turning a customer’s order into a finished product in three days instead of three weeks, thus reducing costs. Teams of employees working with suppliers have cut raw material inventory by half. To learn more about Steelcase, go to www.steelcase.com. Self-Efficacy Self-efficacy is the individual’s estimate of his or her own ability to perform a specific task in a particular situation.26 The greater the employee’s perceived ability to perform the task, the higher the employee’s self-efficacy. Employees with high self-efficacy believe 151 152 Part 2 The Individual in Organizations that (1) they have the ability needed, (2) they are capable of the effort required, and (3) no outside events will keep them from performing at a high level. If employees have low self-efficacy, they believe that no matter how hard they try, something will happen to prevent them from reaching the desired level of performance. Self-efficacy influences people’s choices of tasks and how long they will spend trying to reach their goals.27 For example, a novice golfer who has taken only a few lessons might shoot a good round. Under such circumstances, the golfer might attribute the score to “beginner’s luck” and not to ability. But, after many lessons and hours of practice, an individual with low self-efficacy who still can’t break 100 may decide that the demands of the game are too great to justify spending any more time on it. However, a high self-efficacy individual will try even harder to improve her game. This effort might include taking more lessons, watching videotapes of the individual’s own swing, and practicing even harder and longer. Self-efficacy has an impact on learning in three ways: • It influences the activities and goals that individuals choose for themselves. In a sales contest at Pioneer Telephone Cooperative in Kingfisher, Oklahoma, employees with low self-efficacy didn’t set challenging, or “stretch,” goals. These people weren’t lazy; they simply thought that they would fail to achieve a lofty goal. The high self-efficacy employees thought that they were capable of achieving highperformance goals—and did so. It influences the effort that individuals exert on the job. Individuals with high self• efficacy work hard to learn new tasks and are confident that their efforts will be rewarded. Low self-efficacy individuals lack confidence in their ability to succeed and see their extra effort as futile because they are likely to fail anyway. • It affects the persistence with which an individual stays with a complex task. Because high self-efficacy people are confident that they will perform well, they are likely to persist in spite of obstacles or in the face of temporary setbacks. At IBM, low-performing employees were more likely than high-performing employees to dwell on obstacles hindering their ability to do assigned tasks. When people believe that they aren’t capable of doing the required work, their motivation to do a task will be low. To determine your self-efficacy, turn to the Experiential Exercise on page 154 at the end of this chapter. Insights for Leaders Leaders (and fellow team members) can use social learning theory to help employees learn to believe in themselves. Past experience is the most powerful influence on behavior. At work, the challenge is to create situations in which the employee may respond successfully to the task(s) required. A leader’s expectations for a subordinate’s performance—as well as the expectations of peers—also can affect a person’s self-efficacy. If a leader holds high expectations for an employee and provides proper training and suggestions, the individual’s self-efficacy is likely to increase. Small successes boost self-efficacy and lead to more substantial accomplishments later. If a leader holds low expectations for an employee and gives little constructive advice, the employee is likely to form an impression that he can’t achieve the goal and, as a result, perform poorly. Guidelines for using social learning theory to influence employee behavior in organizations include the following28: • Identify the behaviors that will lead to improved performance. • Select the appropriate model for employees to observe. • Be sure that employees are capable of meeting the technical skills required by the new behaviors. • Create a positive learning situation to increase the likelihood that employees will learn the new behaviors and act accordingly. Chapter 5 • • Learning Concepts to Improve Performance 153 Provide positive consequences (praise, raises, or bonuses) to employees who perform as desired. Develop organizational practices that maintain the newly learned behaviors. The effective use of self-control in learning requires that several conditions be met. First, the individual must engage in behaviors that she wouldn’t normally want to perform. This distinguishes performing activities that the individual enjoys from those involving self-control. Second, the individual must be able to use self-reinforcers, which are rewards that individuals give themselves. Some self-reinforcers include buying oneself a present, going out to a nice restaurant, playing a round of golf at a resort course, and the like. Self-reinforcers come simply from a feeling of accomplishment or achievement. Third, the individual must set goals that determine when self-reinforcers are to be applied. An individual high in self-control doesn’t randomly reward himself, but sets goals that determine when to self-reinforce. In doing so, the individual relies on his own past performance, the performance of others on similar kinds of tasks, or some standard set by others. For example, one of the authors of this book is an accomplished golfer with a single-digit handicap. After playing a round in the 70s, he frequently buys himself a golf shirt as a self-reinforcer for a good round. Finally, the individual must administer the self-reinforcer only when the goal is achieved: The author buys himself a golf shirt only when he shoots a round in the 70s. Chapter Summary Classical conditioning began with Pavlov’s work. He started a metronome (conditioned stimulus) at the same time food was placed in a dog’s mouth (unconditioned stimulus). Quickly the sound of the metronome alone caused the dog to salivate. Operant conditioning focuses on the effects of reinforcement on desirable and undesirable behaviors. Changes in behavior result from the consequences of previous behavior. People tend to repeat a behavior that leads to a pleasant result and not to repeat a behavior that leads to an unpleasant result. In short, when a behavior is reinforced, it is repeated; when it is punished or not reinforced, it is not repeated. 1. Explain the role of The two types of reinforcement are (1) positive reinforcement, which increases a desirable behavior because the individual is provided with a pleasurable outcome after the behavior has occurred; and (2) negative reinforcement, which also maintains the desirable behavior by presenting an unpleasant event before the behavior occurs and stopping the event when the behavior occurs. Both positive and negative reinforcement increase the frequency of a desirable behavior. Conversely, extinction and punishment reduce the frequency of an undesirable behavior. Extinction involves stopping everything that reinforces the behavior. A punisher is an unpleasant event that follows the behavior and reduces the probability that the behavior will be repeated. 2. Describe the There are four schedules of reinforcement. In the fixed interval schedule, the reward is given on a fixed time basis (e.g., a weekly or monthly paycheck). It is effective for maintaining a level of behavior. In the variable interval schedule, the reward is given around some average time during a specific period of time (e.g., the plant leader walking through the plant an average of five times every week). This schedule of reinforcement can maintain a high level of performance because employees don’t know when the reinforcer will be delivered. The fixed ratio schedule ties rewards to certain outputs (e.g., a piece-rate system). This schedule maintains a steady level of behavior once the individual has earned the reinforcer. In the variable ratio schedule, the reward is given around some mean, but the number of behaviors varies (e.g., a payoff from a slot machine). This schedule is the most powerful because both the number of desired behaviors and their frequency change. 3. Explain how positive classical and operant conditioning in fostering learning. contingencies of reinforcement that influence behavior. reinforcement, negative reinforcement, punishment, and extinction affect an individual’s performance. 154 Part 2 4. Describe how social learning theory can be used by individuals to improve their performance. The Individual in Organizations Social learning theory focuses on people learning new behaviors by observing others and then modeling their own behaviors on those observed. The five factors emphasized in social learning theory are symbolizing, forethought, vicarious learning, selfcontrol, and self-efficacy. Key Terms and Concepts Antecedent, 135 Aversive events, 135 Classical conditioning, 133 Consequence, 135 Contingency of reinforcement, 135 Continuous reinforcement, 145 Empowerment, 151 Escape learning, 140 Extinction, 140 Fixed interval schedule, 146 Fixed ratio schedule, 147 Forethought, 149 Intermittent reinforcement, 145 Interval schedule, 145 Kaizen, 139 Learning, 132 Negative reinforcement, 139 Operant conditioning, 134 Positive events, 135 Positive reinforcement, 136 Primary reinforcer, 137 Principle of contingent reinforcement, 138 Principle of immediate reinforcement, 138 Principle of reinforcement deprivation, 139 Principle of reinforcement size, 139 Punishment, 141 Ratio schedule, 145 Reinforcement, 136 Reward, 136 Secondary reinforcer, 137 Self-control, 150 Self-efficacy, 151 Social learning theory, 149 Symbolizing, 149 Variable interval schedule, 147 Variable ratio schedule, 148 Vicarious learning, 150 Discussion Questions 1. 2. 3. 4. To understand what behaviors are rewarded at UPS, visit www.ups.com and in the search bar (upper right hand corner) enter “careers.” Search under careers. What kinds of rewards are given to attract and retain people? What criteria are used by UPS to administer these awards? In the Ethics Competency feature “Time Off for Bad Behavior,” what are some ethical dilemmas created by giving prisoners time off if they legitimately enroll in a substance abuse program while in prison? What behavior(s) are being rewarded? What is the schedule of reinforcement? Visit either a local health club or diet center and schedule an interview with the leader. What types of rewards does it give its members who achieve targeted goals? Does it use punishment? What are some issues surrounding the use of punishment? 5. What are some positive and negative reinforcements that you have experienced either at school or work? How did these affect your behavior? 6. What schedule(s) of reinforcement did your parent(s) use with you to reinforce good behavior at school? 7. How do producers of self-help videos use social learning theory to change an individual’s behavior? 8. How can a leader raise an employee’s level of self-efficacy? 9. If you skipped a class or cut out of work to simply take the day off, what were the consequences of this behavior? How might your teacher or supervisor change your behavior to encourage attendance? 10. Gambling casino owners in Las Vegas, Reno, and Atlantic City use a variable ratio reinforcement schedule. Why do people find this schedule so addictive? Experiential Exercise and Case Experiential Exercise: Self Competency What Is Your Self-Efficacy?29 The following questionnaire gives you a chance to gain insight into your self-efficacy in terms of achieving academic excellence. Using the following five-point scale, answer the following seven questions by circling the number that most Chapter 5 closely agrees with your thinking. An interpretation of your score follows the questions. 5 = Strongly agree 4 = Agree 3 = Moderate 2 = Disagree 1 = Strongly disagree 1. 2. 3. 4. 5. 6. 7. I am a good student. 54321 It is difficult to maintain a study schedule. 54321 I know the right things to do to improve my academic performance. 54321 I find it difficult to convince my friends who have different viewpoints on studying than mine. 54321 My temperament is not well suited to studying. 54321 I am good at finding out what teachers want. 54321 It is easy for me to get others to see my point of view. 54321 Learning Concepts to Improve Performance 155 Add your scores to questions 1, 3, 6, and 7. Enter that score here _______. For questions, 2, 4, and 5, reverse the scoring key. That is, if you answered question 2 as strongly agree, give yourself 1 point, agree is worth 2 points, and so on. Enter your score here for questions 2, 4, and 5 _______. Enter your combined score here _______. This is your self-efficacy score for academic achievement. If you scored between 28 and 35, you believe that you can achieve academic excellence. Scores lower than 18 indicate that you believe, no matter how hard you try to achieve academic excellence, something may prevent you from reaching your desired level of performance. Scores between 19 and 27 indicate a moderate degree of self-efficacy. Your self-efficacy may vary with the course you are taking. In courses in your major, you may have greater self-efficacy than in those outside of your major. Questions 1. Why does self-efficacy influence an individual’s behavior? 2. What actions can you take to increase your self-efficacy at either work or school? Case: Self Competency Joe Salatino, President of Great Northern American30 As president of Great Northern American, Joe Salatino gauges the success of this 35-year-old company by the amount of money he pays employees. The firm’s salespeople will sell more than $20 million in office, promotional, artsand-crafts, and computer supplies to more than 60,000 businesses around the country this year. Great Northern American sells more than 7 million yards of packaging tape, 8 million paper clips, and 11 million BIC and Papermate pens and pencils bearing customer logos, along with about 12,000 other products, each year. The head of this Dallas-based telemarketing company believes that spending money on commissions and bonuses is necessary to keep his 30-person sales force motivated, especially in the face of stiff competition from Internet users. The company’s salesroom features all kinds of motivational devices. On a recent Friday morning, rotating blue lights signal that a special deal on pens is on. For the next hour, customers can get two for one on Stars and Stripes promotional pens. When the blue-light special is off, they’re back up to 39 cents apiece. When the light goes off, a leader draws a large snowball on one of the large dry-erase boards to indicate another sale has ended. The noise and pace is fast and furious. Many of Salatino’s salespeople earn more than $60,000 a year, and top producers earn more than $100,000. Gary Gieb, aka John Johnson, because it’s easier to spell and sounds more all-American over the phone, earned more than $100,000 last year. During a typical day, he makes 20 to 25 calls per hour. If a customer places an order, the entire sale takes just under 5 minutes. He earns commission of between 5 and 12 percent on the list price, depending on the merchandise. A salesperson usually needs a year to build up a good account base. Many employees who can’t handle the self-starting selling intensity and bedlam usually leave within the first month. To establish loyal customers, many top-selling salespeople subscribe to their customer’s hometown newspaper so that they can chat with the customer about local issues, such as who had a baby and who won the local football game. Peggy Gordon topped $70,000 last year selling educational supplies that police and sheriff’s departments take on visits to schools. Salatino believes that employees who have established solid relationships with their customers earn significantly more money than those who have not been able to foster good relationships with customers. Therefore, when hiring telemarketing individuals, he looks for individuals with who have excellent communications skills (especially listening), are respectful of customers’ points of view, have an “upbeat” attitude, and are highly self-motivated. Salatino also knows that customers rarely show gratitude and his telemarketers must take personal credit for the positive results as well as blame when things go bad. Finally, Salatino looks for people who recognize their own strengths and limitations and who thrive on taking the initiative without being told what to do all the time. Questions 1. What kind of reinforcers does Salatino use to motivate his salespeople? 2. What kind of reinforcement schedule is used by Great Northern American to pay salespeople? 3. If you were Salatino, how might the concept of selfefficacy help you hire successful salespeople? chapter 6 Motivating Employees Learning Goals After studying this chapter, you should be able to: 1 Explain basic motivational processes. 2 Describe two basic human needs approaches to motivation. 3 Explain how to design motivating jobs. 4 Describe how expectations can lead to high performance. 5 Explain how treating individuals fairly influences their motivation to work. Learning Content Learning from Experience Working at Starbucks Motivational Processes Satisfying Human Needs Self Competency John Schnatter of Papa John’s Pizza Designing Jobs Teams Competency SEI Investments Influencing Performance Expectations Communication Competency Intuit Ensuring Equity Ethics Competency How Tempted Are You? Experiential Exercise and Case Experiential Exercise: Self Competency What Do You Want from Your Job? Case: Communication Competency SAS Institute Learning from Experience Working at Starbucks LYNNE SLADKY/AP PHOTO Starbucks is everywhere. It is the world’s largest specialty coffee retailer with more than 16,000 shops in more than 35 countries—and that doesn’t include more than 7,000 shops operated by franchisees in airports and shopping centers. The company also owns Seattle’s Best Coffee and Torrefazione Italia coffee brands. It has about 160,000 employees on its payroll serving more than 30 million customers a week. Annual sales exceed $10 billion. Because of recent layoffs and store closings, Howard Schultz, Starbucks’ founder and CEO, sent a message to all partners emphasizing the need to reduce costs while paying attention to Starbucks’ culture. Starbucks has been named one of Fortune magazine’s “100 Best Companies to Work for in America” for the past several years. Sheri Southern, vice president of partner resources for Starbucks, believes that Starbucks’ success is strongly influenced by its individuals, called partners. Starbucks doesn’t just sell coffee, it sells an experience and that experience is totally dependent on the attitudes and skills of the partners who serve customers. According to Alicia Caceres, a recruiter for Starbucks, Starbucks really understands Gen Y partners. Gen Y individuals (born from 1982 through 2000) want a good work/ life balance and ready opportunities for advancement. They tend to bring value systems that put relationships first and quality of life very high on their lists. Southern knows what kinds of individuals will make good partners: those who are adaptable, dependable, and passionate team players. Keeping Gen To learn more about Starbucks, go to www.starbucks.com. Y individuals means finding ways to motivate these individuals. All partners who work a minimum 20 hours a week receive medical and dental coverage, vacation days, and stock options as part of Starbucks Bean Stock Program. Eligible partners can choose health coverage from two managed care plans. Offering comprehensive benefits is a core value of the company and it takes priority over other benefits even when Starbucks is facing difficult economic times. Because Starbucks partners are young and healthy, Starbucks has relatively low health-benefit costs. The company also provides disability and life insurance, a discounted stock purchase plan, and a retirement savings plan with company matching contributions. According to Southern, these benefits provide a meaningful incentive for partners, particularly those working part time, to stay with the company. This reduces Starbucks’ recruiting and training costs. 158 Part 2 The Individual in Organizations Caceres observes that Gen Y individuals are on the go and that their attention span is a little shorter than other individuals’. Therefore, Starbucks’ training focuses on being clear and concise, lasting no more than 30 to 35 minutes at a time. She has also learned that partners want rapid gratification. In-store sales competitions now last no more than a weekend, compared to the past when they lasted a week. Starbucks recognizes that its partners tend to be educated, passionate, philanthropic, and entrepreneurial. Starbucks provides grants to nonprofit organizations based on the number of hours partners volunteer on qualified projects. The purpose of the program is to offer a way to recognize and support each partner’s personal volunteer efforts. This means that relationships—professional and personal—are keyed for partners. Starbucks’ mentoring program is designed to give partners the opportunity to learn new skills and provide them with a clear career path. Through its internal social networking site, MyPartnerCareer.Com, partners are encouraged to create a profile page, network with other partners, and learn about career opportunities at Starbucks. Caceres has found that partners respond with higher commitment and productivity when they know that they are truly listened to by others.1 Alicia Caceres and other leaders at Starbucks say that their greatest challenge is to attract, develop, and manage a worldwide workforce. Many Gen Y types don’t like working for big companies because of their impersonality and size. Caceres and CEO Howard Schultz believe that Starbucks’ motivational programs enable it to remain an attractive place to work. Therefore, Starbucks’ motivational programs include the following features: (1) a list of duties to be performed, (2) the number of hours an employee is required to work, (3) the pay schedule and timetable for the distribution of work schedules, (4) current employee benefits, and (5) operational rules, such as limits on switching shifts or cell phone use at work. Even in tough economic times, attracting and retaining individuals is a major concern of all managers.2 The question of exactly what it takes to motivate individuals to work has received a great deal of attention. We begin by exploring the basic elements of the motivational process. Then, we present four different approaches for motivating employees: (1) meeting basic human needs, (2) designing jobs that motivate individuals, (3) enhancing the belief that desired rewards can be achieved, and (4) treating individuals equitably. Learning Goal 1. Explain basic motivational processes. Motivational Processes Motivation represents the forces acting on or within a person that cause the person to behave in a specific, goal-directed manner.3 Because the motives of employees affect their productivity, one of management’s jobs is to channel employee motivation effectively toward achieving organizational goals. However, motivation isn’t the same as performance. Even the most highly motivated employees may not be successful in their jobs, especially if they don’t have the competencies needed to perform the jobs or they work under unfavorable job conditions. Although job performance involves more than motivation, motivation is an important factor in achieving high performance.4 Experts also do not agree about everything that motivates employees—and the effects of working conditions on their careers—but they do agree that an organization needs to: • attract individuals to the organization and encourage them to remain with it, • allow individuals to perform the tasks for which they were hired, and Chapter 6 Motivating Employees stimulate individuals to go beyond routine performance and become creative and innovative in their work. For an organization to be effective, it must tackle the motivational challenges involved in arousing individuals’ desires to be productive members of the organization. • Core Phases A key motivational principle states that performance is a function of a person’s level of ability and motivation. This principle is often expressed by the following formula: Performance f (ability motivation). According to this principle, no task can be performed successfully unless the person who is to carry it out has the ability to do so. Ability is the person’s natural talent, as well as learned competencies, for performing goal-related tasks. Regardless of a person’s competence, however, ability alone isn’t enough to ensure performance at a high level. The person must also want to achieve a high level of performance. The multiplicative formula suggests that ability and motivation are important. If an employee is 100 percent motivated and 75 percent able to perform a task, he will probably be better than average at performing the task. However, if the same individual has only 10 percent ability, no amount of motivation will enable him to perform satisfactorily. Therefore, motivation represents an employee’s desire and commitment to perform and is evidenced by his performance. The motivational process begins with identifying a person’s needs, shown as phase 1 in Figure 6.1. Needs are deficiencies that a person experiences at a particular time (phase 1). These deficiencies may be psychological (e.g., the need for recognition), physiological (e.g., the need for water, air, or food), or social (e.g., the need for friendship). Needs often FIGURE 6.1 Core Phases of the Motivational Process 1. Employee identifies needs. 6. Employee reassesses need deficiencies. 2. Employee searches for ways to satisfy these needs. 5. Employee receives either rewards or punishments. 3. Employee selects goal-directed behaviors. 4. Employee performs. 159 160 Part 2 The Individual in Organizations act as energizers for behavior. That is, needs create tensions within the individual, who finds them uncomfortable and therefore is likely to make an effort (phase 2) to reduce or eliminate them. Motivation is goal directed (phase 3). A goal is a specific result that an individual wants to achieve. An employee’s goals often are driving forces, and accomplishing those goals can significantly reduce needs. J. C. Hernandez, a relationship manager at Wells Fargo Bank, has a strong drive for advancement. He expects that working long hours on highly visible projects will lead to promotions, raises, greater influence, and job security. His work on major problems facing Wells Fargo is designed to gain visibility and influence with senior leaders (phase 4). Promotions and raises are two of the ways in which organizations attempt to maintain desirable behaviors. They are signals (feedback) to employees that their needs for advancement and recognition and their behaviors are appropriate or inappropriate (phase 5). Once the employees have received either rewards or punishments, they reassess their needs (phase 6). Insights for Leaders The basic motivational process just described appears simple and straightforward. In the real world, of course, the process isn’t as clear-cut. The first insight is that motives can only be inferred; they cannot be seen. Elaine Beecroft, head of project and systems management at Lockheed Martin, observed two employees in her department who were debugging software programs that estimate service requirements for the company. She knows that both employees are responsible for the same type of work, have received similar training, have similar competencies, and have been with the organization for about five years. One employee is able to spot problems more easily and quickly than the other. Are these observable differences a result of differences in ability or motivation? Research has shown that leaders tend to apply more pressure to a person if they feel the person is deliberately not performing up to their expectations and not due to external, uncontrollable events. Unfortunately, if the leader’s assessment is incorrect and poor performance is related to ability rather than motivation, the response of increased pressure will worsen the problem. What happens if poorly performing employees feel that management is insensitive to their problems, which the employees attribute to inadequate training or unrealistic time schedules? They may respond by developing a motivational problem and will decrease their commitment in response to management’s insensitive actions. Therefore, before Elaine decided what actions to take, she had to deepen her understanding of why one person’s output is greater than the others. A second leader insight centers on the dynamic nature of needs.5 As we pointed out in the Learning from Experience feature, Starbucks has developed numerous programs in its attempts to meet partners’ needs. Doing so is always difficult because, at any one time, everyone has various needs, desires, and expectations. Moreover, these factors change over time and may also conflict with each other. Employees who put in many extra hours at work to fulfill their needs for accomplishment may find that these extra work hours conflict directly with needs for affiliation and their desires to be with their families. A third insight involves the considerable differences in individuals’ motivations and in the energy with which individuals respond to them. Just as different organizations produce a variety of products and offer a variety of services, different individuals have a variety of motivations. Curtis Harris, an engineer with Texas Instruments (TI), took an assignment with TI’s plant in Sendai, Japan. He soon joined a group of American leaders so he could satisfy his need to learn quickly about Japanese management practices. He discovered that Japanese do not bypass formal lines of communication. Seniority and titles are to be respected and honored and bypassing the chain of command would be a sign of disrespect. Chapter 6 Motivating Employees 161 All of these insights are things that leaders can do something about. Leaders can determine what motivates employees and use this knowledge to channel employees’ energies toward the achievement of the organization’s goals. With this opportunity in mind, we devote the rest of the chapter to various approaches to motivation that leaders can apply.6 Satisfying Human Needs Learning Goal 2. Describe two basic human Needs Hierarchy Model needs approaches to motivation. The most widely recognized model of motivation is the needs hierarchy model. In this model, Abraham H. Maslow suggested that individuals have a complex set of exceptionally strong needs, that can be arranged in a hierarchy.7 Underlying this hierarchy are the following basic assumptions: Once a need has been satisfied, its motivational role declines in importance. • However, as one need is satisfied, another need gradually emerges to take its place, so individuals are always striving to satisfy some need. • The needs network for most individuals is very complex, with several needs affecting behavior at any one time. Clearly, when someone faces an emergency, such as desperate thirst, that need dominates until it is gratified. • Lower level needs must be satisfied, in general, before higher level needs are activated sufficiently to drive behavior. • There are more ways of satisfying higher level than lower level needs. This model states that a person has five types of needs: physiological, security, affiliation, esteem, and self-actualization. Figure 6.2 shows these five needs categories, arranged in Maslow’s hierarchy. FIGURE 6.2 Maslow’s Needs Hierarchy SelfActualization Esteem Affiliation Security Physiological 162 Part 2 The Individual in Organizations Physiological Needs Physiological needs are the desire for food, water, air, and shelter. They are the lowest level in Maslow’s hierarchy. Individuals concentrate on satisfying these needs before turning to higher order needs. Leaders should understand that, to the extent employees are motivated by physiological needs, their concerns do not center on the work they are doing. They will accept any job that meets those needs. Leaders who focus on physiological needs in trying to motivate subordinates assume that individuals work primarily for money. Hershey Foods, for example, offers insurance rebates to employees who live healthy lifestyles (e.g., physically fit nonsmokers) and raises premiums for those at greater risk. In this way, they offer incentives to encourage wellness activities. Security Needs Security needs are the desire for safety, stability, and the absence of pain, threat, or illness. Like physiological needs, unsatisfied security needs cause individuals to be preoccupied with satisfying them. Individuals who are motivated primarily by security needs value their jobs mainly as defenses against the loss of basic needs satisfaction. During the recent worldwide economic recession, many individuals felt that their security needs were threatened because of plant closings, permanent reductions in their company’s workforce, and the outsourcing of many U.S. manufacturing jobs to foreign lands. Psychological safety is also important. By offering health, life, and disability insurance, organizations like Starbucks promote their partners’ sense of security and well-being. Affiliation Needs Affiliation needs are the desire for friendship, love, and a feeling of belonging. When physiological and security needs have been satisfied, affiliation needs emerge. Leaders should realize that when affiliation needs are the primary source of motivation, individuals value their work as an opportunity for finding and establishing warm and friendly interpersonal relationships. Team leaders who believe that employees are striving primarily to satisfy these needs are likely to act supportively. They emphasize employee acceptance by coworkers, extracurricular activities (e.g., organized sports programs, cultural events, and company celebrations), and team-based norms. Starbucks’ volunteer programs are examples of an organization satisfying its employees’ affiliation needs. Esteem Needs The desires for feelings of achievement, self-worth, and recognition or respect are all esteem needs. Individuals with esteem needs want others to accept them for what they are and to perceive them as competent and able. Leaders who focus on esteem needs try to motivate employees with public rewards and recognition for achievements. Such leaders may use lapel pins, articles in the company paper, achievement lists on the bulletin board, and the like to foster employees’ pride in their work. Mary Kay Cosmetics rewards top performers with a pink Cadillac. According to the late Mary Kay Ash, the founder of her company, individuals want recognition and praise more than money. Self-Actualization Needs Self-actualization needs involve individuals realizing their full potential and becoming all that they can become. Individuals who strive for self-actualization seek to increase their problem-solving abilities. Leaders who emphasize self-actualization may involve employees in designing jobs, make special assignments that capitalize on employees’ unique skills, or give employee teams leeway in planning and implementing their Chapter 6 Motivating Employees work. The self-employed often have strong self-actualization needs. When Mary Kay Ash founded her firm in 1963, she acted on her belief that, when a woman puts her priorities in order, she can indeed have it all. Insights for Leaders Maslow’s needs hierarchy model also suggests the types of behaviors that will help fulfill various needs. The three lowest categories of needs—physiological, security, and affiliation (social)—are also known as deficiency needs. According to Maslow, unless these needs are satisfied, an individual will fail to develop into a healthy person, both physically and psychologically. In contrast, esteem and self-actualization needs are known as growth needs. Satisfaction of these needs helps a person grow and develop as a human being. What needs is Starbucks satisfying for its employees? The needs hierarchy is based on U.S. cultural values.8 In cultures that value uncertainty avoidance, such as Japan and Greece, job security and lifelong employment are stronger motivators than self-actualization. Moreover, in Denmark, Sweden, and Norway, the value and rewards of a high quality of life are more important than productivity. Thus, social needs are stronger than self-actualization and self-esteem needs in these countries. In countries such as China, Japan, and Korea that value collectivist and community practices over individual achievements, belonging and security are considerably more important than meeting growth needs. In developing East African nations that exhibit high uncertainty avoidance, low individualism, and high power distance, the community dominates. For example, their dances and worship ceremonies are focused on the community. Clearly the motivation of employees from more collective cultures differs from that of more individualistic countries. Therefore, although the needs that Maslow identified may be universal, their importance and the ways in which they are expressed vary across cultures, as does the rank ordering of their importance.9 Maslow’s work has received much attention from leaders, as well as psychologists.10 Research has found that individuals are better able to satisfy their esteem and self-actualization needs than are lower level leaders; part of the reason is that top leaders have more challenging jobs and opportunities for self-actualization. Employees who work on a team have been able to satisfy their higher level needs by making decisions that affect their team and organization. At the Container Store, groups of employees are trained to perform multiple tasks, including hiring and training team members—and even firing those who fail to perform adequately. As team members learn new tasks, they start satisfying their higher level needs. The fulfillment of needs differs according to the job a person performs, a person’s age and background, and the size of the company. “Not everyone is motivated in the same way. You shouldn’t assume that it’s a one-size-fits-all solution. You have to understand individuals’ needs,” says Andy Kohlberg, president of Kisco Senior Living of Carlsbad, California. Learned Needs Model David McClelland proposed a learned needs model of motivation that he believed to be rooted in culture.11 He argued that everyone has three particularly important needs: for achievement, power, and affiliation. The need for achievement has been defined as behavior toward competition with a standard of excellence. In other words, individuals with a high need for achievement want to do things better and more efficiently than others have done before. The need for power can be defined as the desire to influence individuals and events. According to McClelland, there are two types of power: one that is directed toward the organization (institutional power) and one that is directed toward the self (personal power). Individuals who possess a strong power motive take action that affects the behaviors of others and has a strong emotional appeal. These 163 164 Part 2 The Individual in Organizations individuals are concerned with providing status rewards to their followers. The need for affiliation has been defined as the desire to be liked and to stay on good terms with others. Individuals who have a strong affiliation motive tend to establish, maintain, and restore close personal relationships with others. A recent Gallup survey found that employees who have a best friend at work are more engaged and productive than those who do not report having a good friend at work.12 McClelland has studied achievement motivation extensively, especially with regard to entrepreneurship. His achievement motivation model states that individuals are motivated according to the strength of their desire either to perform in terms of a standard of excellence or to succeed in competitive situations. According to McClelland, almost all individuals believe that they have an “achievement motive,” but probably only about 10 percent of the U.S. population is strongly motivated to achieve. The amount of achievement motivation that individuals have depends on their childhood, their personal and occupational experiences, and the type of organization for which they work. Table 6.1 shows an application of McClelland’s model to managing others. According to McClelland’s model, motives are “stored” in the preconscious mind just below the level of full awareness. They lie between the conscious and TABLE 6.1 Learned Needs Model POWER FOCUS ON ACHIEVEMENT AFFILIATION Motives Improve their personal performance and meet or exceed standards of excellence Maintain close, friendly relationships Be strong and influence others, making them feel weak Help people feel stronger and more capable Potential positive effects Meet or surpass a self-imposed standard Establish, restore, or maintain warm relationships Perform powerful actions Perform powerful actions Accomplish something new Be liked and accepted Control, influence, or persuade people Persuade people Plan the long-term advancement of your career Participate in group activities, primarily for social reasons Impress people inside or outside the company Impress people inside or outside the company Try to do things or set the pace themselves Worry more about people than performance Be coercive and ruthless Coach and teach Express impatience with poor performers Look for ways to create harmony Control and manipulate others Be democratic and involve others Give little positive feedback Avoid giving negative feedback Look out for their own interests and reputations Be highly supportive Potential negative effects PERSONALIZED SOCIALIZED POWER POWER Give few directions or instructions Focus on the team rather than themselves Source: Adapted from Spreier, S. W., Fontaine, M. H., and Malloy, R. L. Leadership run amok. Harvard Business Review, 2006, 84(6), 75. Chapter 6 Motivating Employees the unconscious, in the area of daydreams, where individuals talk to themselves without quite being aware of it. A basic premise of the model is that the pattern of these daydreams can be tested and that individuals can be taught to change their motivation by changing these daydreams. Measuring Achievement Motivation McClelland measured the strength of a person’s achievement motivation with the Thematic Apperception Test (TAT). The TAT uses unstructured pictures that may arouse many kinds of reactions in the person being tested. Examples include an inkblot that a person can perceive as many different objects or a picture that can generate a variety of stories. There is no right or wrong answer, and the person isn’t given a limited set of alternatives from which to choose. A major goal of the TAT is to obtain the individual’s own perception of the world. The TAT is called a projective method because it emphasizes individual perceptions of stimuli, the meaning each individual gives to them, and how each individual organizes them (recall the discussion of perception in Chapter 4). One projective test involves looking at the picture shown in Figure 6.3 for 10 to 15 seconds and then writing a short story about it that answers the following questions: What are individuals doing in this picture? • • What is being felt? What is being thought? By whom? How will it come out? What will happen? FIGURE 6. 3 Sample Picture Used in a Projective Test MANCHAN/DIGITAL VISION/GETTY IMAGES • 165 166 Part 2 The Individual in Organizations Write your own story about the picture in 75 to 100 words. Then compare it with the following story written by Susan Reed, general manager, at Innovative Hospice Care13: The four individuals are working as a team to accomplish the task of getting a woman over a wall. She probably couldn’t make it without the help of her teammates. They all have duties—pushing, pulling, grabbing—to perform in getting her over the wall. The woman is excited about accomplishing this task and is counting on her teammates to help her. After they achieve their goal, they can relax knowing that they reached their goal of helping a teammate. What motivational profile did you identify? Does it match this person’s? Characteristics of High Achievers Self-motivated high achievers have three main characteristics. First, they like to set their own goals. Seldom content to drift aimlessly and let life happen to them, they nearly always are trying to accomplish something. High achievers seek the challenge of making tough decisions. They are selective about the goals to which they commit themselves. Hence, they are unlikely to automatically accept goals that other individuals, including their superiors, attempt to select for them. They exercise self-control over their behaviors, especially the ways in which they pursue the goals they select. They tend to seek advice or help only from experts who can provide needed knowledge or skills. High achievers prefer to be fully responsible for attaining their goals. If they win, they want the credit; if they lose, they accept the blame. For example, assume that you are given a choice between rolling dice with one chance in three of winning, or working on a problem with one chance in three of solving the problem in the time allotted. Which would you choose? A high achiever would choose to work on the problem, even though rolling the dice is obviously less work and the odds of winning are the same. High achievers prefer to work at a problem rather than leave the outcome to chance or to other individuals. Second, high achievers avoid selecting extremely difficult goals. They prefer moderate goals that are neither so easy that attaining them provides no satisfaction nor so difficult that attaining them is more a matter of luck than ability. They gauge what is possible and then select as difficult a goal as they think they can attain. The game of ring toss illustrates this point. Most carnivals have ring toss games that require participants to throw rings over a peg from some minimum distance but specify no maximum distance. Imagine the same game but with individuals allowed to stand at any distance they want from the peg. Some will throw more or less randomly, standing close and then far away. Those with high-achievement motivation will seem to calculate carefully where they should stand to have the greatest chance of winning a prize and still feel challenged. These individuals seem to stand at a distance that isn’t so close as to make the task ridiculously easy and isn’t so far away as to make it impossible. They set a distance moderately far away from which they can potentially ring a peg. Thus, they set personal challenges and enjoy tasks that will stretch their abilities. Third, high achievers prefer tasks that provide immediate feedback. Because of the goal’s importance to them, they like to know how well they’re doing. That’s one reason why the high achiever often chooses a professional career, a sales career, or entrepreneurial activities. Golf appeals to most high achievers: Golfers can compare their scores to par for the course, to their own previous performance on the course, and to their opponents’ scores; performance is related to both feedback (score) and goal (par). It also provides immediate feedback because a person earns an individual score and receives feedback following each shot. There are no teammates to coordinate with or cover a mistake. The ultimate responsibility for your shot is yours. Chapter 6 Motivating Employees Financial Incentives Money has a complex effect on high achievers. They usually value their services highly and place a high price tag on them. High achievers are usually self-confident. They are aware of their abilities and limitations and thus are confident when they choose to do a particular job. They are unlikely to remain very long in an organization that doesn’t pay them well. Whether an incentive plan actually increases their performance is an open question because they normally work at peak efficiency. They value money as a strong symbol of their achievement and adequacy. A financial incentive may create dissatisfaction if they feel that it inadequately reflects their contributions. When achievement motivation is operating, outstanding performance on a challenging task is likely. However, achievement motivation doesn’t operate when high achievers are performing routine or boring tasks or when there is no competition against goals. An example of a high achiever is John Schnatter, founder of Papa John’s Pizza. Schnatter’s drive is to become number one in the $28 billion dollar pizza industry.14 Self competency As a high school student working at a local pizza shop in Jeffersonville, Indiana, Schnatter in the early 1980s realized that there were no national takeout pizza chains. So in 1984, he knocked out a broom closet located in the back of his father’s tavern, sold his prized Z28 Camaro, purchased $1,600 worth of used restaurant equipment, and began selling pizzas to the tavern’s customers. The business grew so fast that he decided to move next door. He eventually opened his first Papa John’s restaurant in 1985. Today, Papa John’s operates the third largest pizza chain behind Pizza Hut and Domino’s in the delivery and takeout pizza market with more than 3,000 pizzerias worldwide and sales of more than $1.1 billion dollars annually. With 27 percent of the market share, Schnatter’s goal is to take market share away from Pizza Hut (which has about 38 percent) and Domino’s (which has about 30 percent) by having better ingredients, making a better pizza, and expanding internationally especially in the United Kingdom, Asia, and China. He has achieved remarkable results by being singularly obsessive about high quality and performance. He preaches to his employees about pizza in very passionate terms. He requires all employees to memorize the company’s Six Core Values, TARO YAMASAKI/TIME LIFE PICTURES/GETTY IMAGES John Schnatter of Papa John’s Pizza John Schnatter, founder and president of Papa John’s Pizza. 167 168 Part 2 The Individual in Organizations including stay focused, customer satisfaction must be superior, and individuals are priority No. 1 always—and calls on employees during meetings to stand up and shout them out. He created a Ten Point Perfect Pizza Scale that measures the quality of pizzas. For example, pieces of the toppings should not touch, there should be no “peaks or valleys” along the pizza’s border, all mushrooms should be sliced to a quarter inch, and no splotchy coloring should appear on the crust. The employee newsletter carries articles such as “The Papa John’s Black Olive Story” or “The Papa John’s Tomato Story.” Such articles inform employees about how special ingredients are used to make Papa John’s pizza. At headquarters in Louisville, Kentucky, most employees (including Schnatter) wear Papa John’s teal-blue polo shirts, with Pizza Wars embroidered across them. Employees even have their own clothing embroidered with Papa John’s logo. Recognizing that international consumers have different tastes (e.g., baby lobster pizza in China) and get their pizza delivered by scooters or bicycles, rather than automobile as in the United States, Schnatter believes that Papa John’s can grow by 32 percent a year in these markets. By 2010, Schnatter wants Papa John’s to be the number one pizza brand in the world in terms of name recognition and by 2014, the leader in sales. To learn more about Papa John’s, go to www.papajohns.com. Insights for Leaders McClelland and his associates at McBer and Company have conducted most of the research supporting the learned needs motivation model.15 They have found that high needs for institutional power and achievement are critical for high-performing leaders. Individuals with these high needs are particularly good at increasing morale, creating clear expectations for performance, and getting others to work for the good of the organization. Interestingly the need for institutional power is more imporAcross Cultures Insight tant for managerial success than the need for achievement. We must be willing to reexamine our interIndividuals high in need for achievement tend to be reluctant to national partners’ needs and offer them delegate work to others and to be patient when working toward more chances to satisfy these at work and long-term objectives, both of which are behaviors that are often enhance their lives. Partners in China must necessary for effective leaders. Individuals with a high need for be able to deliver unparalleled experiences achievement are often attracted to organizations that have a payfor our customers for us to be successful. for-performance reward system because they know that if they perform, they will be financially rewarded. Finally, their research Martin Coles, President, Starbucks Coffee International has found that successful CEOs are high in institutional power and achievement but low in affiliation needs. Why? Senior leaders often make difficult decisions and cannot worry too much about whether their decisions are liked by others. The following insights for leaders are recommended to foster achievement motivation in employees: • Arrange tasks so that employees receive periodic feedback on their performance. Feedback enables employees to modify their behaviors as necessary. • Provide good role models of achievement. Employees should be encouraged to have heroes to emulate. • Help employees modify their self-images. High-achievement individuals accept themselves and seek job challenges and responsibilities. • Guide employee aspirations. Employees should think about setting realistic goals and the ways in which they can attain them. • Make it known that leaders who have been successful are those who are higher in power motivation than in affiliation motivation. Chapter 6 Motivating Employees 169 One of the main problems with the learned needs motivation model is also its greatest strengths. The TAT method is valuable because it allows the researcher to tap the preconscious motives of individuals. This method has some advantages over questionnaires, but the interpretation of a story is more of an art than a science. As a result, the method’s reliability is open to question. The permanency of the model’s three needs has also been questioned. Further research is needed to explore the model’s validity.16 Designing Jobs Learning Goal 3. Explain how to design Motivator–Hygiene Model motivating jobs. 17 In a recent survey, 41 percent of employees were very satisfied with their jobs. What are the reasons for high job satisfaction? Frederick Herzberg and his associates have found the answer to this question. They asked individuals to tell them when they felt exceptionally good about their jobs and when they felt exceptionally bad about their jobs. As shown in Table 6.2, individuals identified somewhat different things when they felt good or bad about their jobs. From this study they developed the two-factor theory, better known as the motivator–hygiene model, which proposes that two sets of factors— motivators and hygienes—are the primary causes of job satisfaction and job dissatisfaction.18 Motivator Factors Motivator factors include the work itself, recognition, advancement, and responsibility. These factors are related to an individual’s positive feelings about the job and to the content of the job itself. These positive feelings, in turn, are associated with the individual’s experiences of achievement, recognition, and responsibility. They reflect lasting rather than temporary achievement in the work setting. In other words, motivators are intrinsic factors, which are directly related to the job and are largely internal to the individual. The organization’s policies may have only an indirect impact on them. But, by defining exceptional performance, for example, an organization may enable individuals to feel that they have performed their tasks exceptionally well. Look back at the chapter-opening Learning from Experience feature and identify some of the motivators that Starbucks uses. Hygiene Factors Hygiene factors include company policy and administration, technical supervision, salary, fringe benefits, working conditions, job security, and interpersonal relations. These factors are associated with an individual’s negative feelings about the job and are related to the environment in which the job is performed. Hygiene factors are extrinsic factors, TABLE 6.2 Sources of Job Satisfaction and Job Dissatisfaction MOTIVATOR FACTORS THAT AFFECT JOB SATISFACTION HYGIENE FACTORS THAT AFFECT JOB DISSATISFACTION • Achievement • Advancement • Autonomy • Challenge • Feedback • Responsibility • Organizational rules and policies • Relationships with coworkers • Relationships with supervisors • Salary • Security • Working conditions 170 Part 2 The Individual in Organizations or factors external to the job. They serve as rewards for high performance only if the organization recognizes high performance. Save Mart Supermarkets rewarded three employees with a Dodge Challenger car for their excellence in customer service. It believes that giving employees rewards, such as cars, cruises, and consumer electronics, motivates them to drive for service excellence. Do you agree with these types of rewards for motivating employees? Can you identify the hygiene factors used by Starbucks to attract new employees? It is important to note that those factors that lead to job satisfaction are not the same as those factors that lead to job dissatisfaction. Job security, benefits, and feeling safe cannot increase employee job satisfaction, but if these are not present, they can lead to job dissatisfaction. Job Characteristics Model The job characteristics model is one of the best known approaches to job design.19 The job characteristics model uses Herzberg’s recommendations of adding motivators to a person’s job and minimizing the use of hygiene factors. Before reading further, complete the Designing a Challenging Job questionnaire found in Table 6.3. Framework The job characteristics model involves increasing the amounts of skill variety, task identity, task significance, autonomy, and feedback in a job. The model proposes that the levels of these job characteristics affect three critical psychological states: (1) experienced meaningfulness of the tasks performed, (2) experienced personal responsibility for task outcomes, and (3) knowledge of the results of task performance. If all three TABLE 6. 3 Designing a Challenging Job Directions The following list contains statements that could be used to describe a job. Please indicate the extent to which you agree or disagree with each statement as a description of a job you currently hold or have held, by writing the appropriate number next to the statement. Try to be as objective as you can in answering. 1 Strongly Disagree 2 Disagree 3 Uncertain 4 Agree 5 Strongly Agree This job . . . _____ 1. provides much variety. _____ 2. permits me to be left on my own to do my work. _____ 3. is arranged so that I often have the opportunity to see jobs or projects through to completion. _____ 4. provides feedback on how well I am doing as I am working. _____ 5. is relatively significant in my organization. _____ 6. gives me considerable opportunity for independence and freedom in how I do the work. _____ 7. provides different responsibilities. _____ 8. enables me to find out how well I am doing. _____ 9. is important in the broader scheme of things. _____ 10. provides an opportunity for independent thought and action. _____ 11. provides me with a considerable variety of work. _____ 12. is arranged so that I have the opportunity to complete the work I start. _____ 13. provides me with the feeling that I know whether I am performing well or poorly. _____ 14. is arranged so that I have the chance to do a job from the beginning to the end (i.e., a chance to do the whole job). _____ 15. is one where a lot of other people can be affected by how well the work gets done. Chapter 6 Motivating Employees Scoring For each of the five scales, compute a score by summing the answers to the designated questions. Skill variety: Sum the points for items 1, 7, and 11. Task identity: Sum the points for items 3, 12, and 14. Task significance: Sum the points for items 5, 9, and 15. Autonomy: Sum the points for items 2, 6, and 10. Job feedback: Sum the points for items 4, 8, and 13. Total Score: Score ___ ___ ___ ___ ___ ___ Summary Interpretation A total score of 60-75 suggests that the core job characteristics contribute to an overall positive psychological state for you and, in turn, lead to desirable personal and work outcomes. A total score of 15-30 suggests the opposite. You can develop your own job profile by using the totals on the scales in the questionnaire, each of which has a score range of 3-15. You can calculate an overall measure of job enrichment, called the motivating potential score (MPS), as follows. MPS skill variety task identity task significance autonomy feedback 3 The MPS formula sums the scores for skill variety, task identity, and task significance and divides the total by 3. Thus, the combination of these three job characteristics has the same weight as autonomy and job feedback. This is because the job characteristics enrichment model requires that both experienced responsibility and knowledge of results be present for high internal job motivation. This outcome can be achieved only if reasonable degrees of autonomy and job feedback are present. The minimum MPS score is 1, and the maximum possible MPS score is 3,375. A clearly positive MPS score starts at 1,728, and a purely neutral MPS score is 729 (based on an average score of 9 per scale). Questions 1. Visit any fast-food restaurant. Evaluate the motivating potential score of the order taker. As a manager, how might you redesign this job to increase its motivating potential score? 2. Why is a high motivating potential score more likely to lead to higher job performance than a low motivating potential score? psychological states are positive, a reinforcing cycle of strong work motivation based on self-generated rewards is activated. A job without meaningfulness, responsibility, and feedback is incomplete and doesn’t strongly motivate an employee. Figure 6.4 illustrates the elements of the job characteristic model and their relationships. Job Characteristics Five job characteristics hold the key to this model. They are defined as follows: 1. Skill variety—the extent to which a job requires a variety of employee competencies to carry out the work 2. Task identity—the extent to which a job requires an employee to complete a whole and identifiable piece of work, that is, doing a task from beginning to end with a visible outcome 3. Task significance—the extent to which an employee perceives the job as having a substantial impact on the lives of other individuals, whether those individuals are within or outside the organization 4. Autonomy—the extent to which the job provides empowerment and discretion to an employee in scheduling tasks and in determining procedures to be used in carrying out those tasks 5. Job feedback—the extent to which carrying out job-related tasks provides direct and clear information about the effectiveness of an employee’s performance. 171 172 Part 2 The Individual in Organizations FIGURE 6.4 Job Characteristics Enrichment Model Core Job Characteristics Critical Psychological States Personal and Work Outcomes Skill variety Task identity Task significance Experienced meaningfulness of the work High internal work motivation High quality work performance Autonomy Experienced responsibility for outcomes of the work High satisfaction with the work Job feedback Knowledge of the actual results of the work Low absenteeism and turnover Individual Differences • Knowledge and skill • Growth-need strength • Satisfaction with contextual factors Source: J. Richard Hackman & Greg R. Oldham, Work Redesign (Prentice Hall Organizational Development Series), 1st © 1980. Reproduced by permission of Pearson Education, Inc. Upper Saddle River, New Jersey. Individual Differences The individual differences (see Figure 6.4) identified in this model influence how employees respond to enriched jobs. They include knowledge and skills, strength of growth needs, and satisfaction with contextual factors. These individual differences have an impact on the relationship between job characteristics and personal or work outcomes in several important ways. Leaders, therefore, should consider them when designing or redesigning jobs. Employees with the knowledge and skills needed to perform an enriched job effectively are likely to have positive feelings about the tasks they perform. Employees unable to perform an enriched job may experience frustration, stress, and job dissatisfaction. These feelings and attitudes may be especially intense for employees who desire to do a good job but realize that they are performing poorly because they lack the necessary skills and knowledge. Accordingly, assessing carefully the competencies of employees whose jobs are to be enriched is essential. A training and development program may be needed along with an enrichment program to help such employees attain the needed competencies. Chapter 6 Motivating Employees The extent to which an individual desires the opportunity for self-direction, learning, and personal accomplishment at work is called growth-need strength. This concept is essentially the same as Maslow’s esteem and self-actualization needs concepts. Individuals with high growth needs tend to respond favorably to job enrichment programs. They experience greater satisfaction from work and are more highly motivated than individuals who have low growth needs. High growth-need individuals are generally absent less and produce better quality work when their jobs are enriched. Contextual factors include cultural values, organizational policies and administration, technical supervision, salary and benefit programs, interpersonal relations, travel requirements, and work conditions (lighting, heat, safety hazards, and the like). The extent to which employees are satisfied with contextual factors at work often influences their willingness or ability to respond positively to enriched jobs. Contextual factors are similar to hygiene factors. Employees who are extremely dissatisfied with their superiors, salary levels, and safety measures are less likely to respond favorably to enriched jobs than are employees who are satisfied with these conditions. Other contextual factors (e.g., organizational culture, power and the political process, travel requirements, and team norms) also can affect employee responses to their jobs. Insights for Leaders The two most widely used approaches recommended to leaders for designing enriched jobs are vertical loading and the formation of natural work teams. Vertical loading is the delegation to employees of responsibilities and tasks that were formerly reserved for management or staff specialists. Vertical loading includes the empowerment of employees to: • • • set schedules, determine work methods, and decide when and how to check on the quality of the work produced; make their own decisions about when to start and stop work, when to take breaks, and how to assign priorities; and seek solutions to problems on their own, consulting with others only as necessary, rather than calling immediately for the manager when problems arise. The formation of natural teams combines individual jobs into a formally recognized unit (e.g., a section, team, or department). The criteria for the groupings are logical and meaningful to the employee and include the following: • • • • • Geographic: Sales individuals or information technology consultants might be given a particular region of the state or country as their territory. Types of business: Insurance claims adjusters might be assigned to teams that serve specific types of businesses, such as utilities, manufacturers, or retailers. Organizational: Word-processing operators might be given work that originates in a particular department. Alphabetic or numeric: File clerks could be made responsible for materials in specified alphabetical groups (A to D, E to H, and so on); library-shelf readers might check books in a certain range of the library’s cataloging system. Customer groups: Employees of a public utility or consulting firm might be assigned to particular industrial or commercial accounts. Many companies have used job enrichment recommendations to help them reduce turnover and absenteeism. Scott Kerslake, CEO of Athleta Corporation, a sports apparel company, tells his 60 employees to put themselves and their personal needs before jobs. Athleta’s turnover rate is less than 1 percent in an industry that averages 38 percent, and employees are getting their work done because each employee is cross-trained and can fill in for one another as needed.20 173 174 Part 2 The Individual in Organizations To show the benefits of enriched jobs, the following Teams Competency feature illustrates how SEI Investments uses job enrichment concepts to maintain and increase productivity at its Oaks, Pennsylvania, headquarters.21 After reading this feature, you should be able to identify the five job characteristics and methods used by SEI to enrich employees' jobs. Teams competency SEI Investments The first sign that there’s something unusual about SEI investments, a $1.3 billion financial company, is the design of its headquarters building. On the outside, it looks like a Playskool version of a farm. On the inside, it looks like a beehive. All the furniture is on wheels so that employees can create their own work area. Colorful cables spiral down from the ceiling, carrying electricity, Internet access, and telephone cords. SEI has created a software map to locate all employees. There are no secretaries, walls, or organizational charts. Tasks are distributed among its 98 employees. Some employees work in self-managed teams, while others do their job alone. Employees come together to solve a problem and disband when the task is completed. Different employees work on different financial models until the task is completed. All employees know the goals that matter most: earnings per share and assets under management. SEI leaders establish corporate-level goals and these then translate into goals for teams. Alfred West, SEI’s president, explained, “Our goals are passed out to the teams and they figure out what they have to do to hit them. Once the team understands its goal(s), everyone on that team drives toward that goal.” West and other leaders do not care how many vacation days employees take so long as they hit their goals. To motivate employees to work in teams, West and other leaders follow this basic principle: Self-management teams need leaders. Employees must demonstrate certain competencies to be chosen by their coworkers to be team leaders. Team leaders need communication, ethical, diversity, and other competencies that enable them to use a “soft” hand to guide the team. It’s up to the team leaders to describe the project in a passionate manner so that others will want to join the team. Teamwork is a major part of an individual’s pay. SEI uses incentive team-based compensation whereby employees can earn anywhere from 10 to 100 percent of their base pay. “Each team gets a pot of money,” says West, and then decides how to distribute it. Some teams have members vote on each other’s bonuses, while other teams defer to the team leader. To learn more about SEI, go to www.seic.com. Cultural Influences One of the important themes of this book is recognizing and addressing cultural diversity in the workforce. As U.S. organizations continue to expand overseas and foreign organizations establish manufacturing operations in Canada, Mexico, and the United States, leaders must be aware of cultural differences and how these differences can affect the motivation of employees. Cultural values are a part of the contextual factors with which leaders must deal. In Chapter 3, we noted the five cultural factors—individualism/collectivism, power distance, uncertainty avoidance, gender role orientation, and long-term orientation—that impact individuals’ attitudes. With the passage of the North American Free Trade Agreement (NAFTA), leaders and Chapter 6 Motivating Employees 175 employees in North America began working more closely with others who don’t necessarily share similar cultural values about the motivation to work. It didn’t take U.S. leaders very long to realize that employees in Mexico have different attitudes toward work.22 In the United States, workers generally favor taking the initiative, having individual responsibility, and taking failure personally. They are competitive, have high goals, and live for the future. Workers are comfortable operating in a group, with the group sharing both successes and failures. They tend to be cooperative, flexible, and enjoy life as it is now. In Mexico, employees usually are not willing to speak up and take the initiative. Employees also prefer a management style that is more authoritarian and do not like to work in teams because of the emphasis on family rather than work teams. However, if the work team is seen as part of an individual’s extended family, the team can be a powerful motivator. Employees’ priorities are family, religion, and work—in that order. During the year, plant managers host family dinners to celebrate anniversaries of employees who have worked there 5, 10, 15, and 20 years. Employees may use the company clubhouse for weddings, baptisms, anniversary parties, and other family celebrations. Organizations also host a family day during which employees’ families can tour the plant, enjoy entertainment and food, and participate in soccer, bowling, and other events. It is very important for families to be invited and involved. The length of the typical workday in Mexico is similar to the U.S. workday: 8 a.m. to 5:30 p.m., but there are many differences: Employees are picked up by a company bus at various locations throughout the city. Employees like to eat their main meal in the middle of the day, the cost of which is heavily subsidized (as much as 70 percent) by the company. Interestingly, the leaders serve the employees this meal. They are mirroring a family setting, in which parents serve their children. This is not only good for morale, but it also reinforces cultural values. Influencing Performance Expectations Besides creating jobs that individuals find challenging and rewarding, individuals are also motivated by the belief that they can expect to achieve certain rewards by working hard to attain them. Believing that you can get an “A” in this class by expending enough effort can be a very effective motivator. If you can clearly see a link between your study behaviors (effort) and your grade (goal), you will be motivated to study. If you see no link, why study at all? To better understand this approach to motivation, let’s focus on you as we take a look at the expectancy model and explain how this model motivates you to choose certain behaviors and not others. Expectancy Model The expectancy model states that individuals are motivated to work when they believe that they can achieve things they want from their jobs. These things might include satisfaction of safety needs, the excitement of doing a challenging task, or the ability to set and achieve difficult goals. A basic premise of the expectancy model is that you are a rational person. Think about what you have to do to be rewarded and how much the rewards mean to you before you perform your job. Four assumptions about the causes of behavior in organizations provide the basis for this model. First, a combination of forces in you and the environment determines behavior. Neither you nor the environment alone determines behavior. You go to work or attend school with expectations that are based on your needs, motivations, and past experiences. These factors influence how you will respond to an organization, but they can and do change over time. Learning Goal 4. Describe how expectations can lead to high performance. 176 Part 2 The Individual in Organizations Second, you decide your own behavior in organizations, even though many constraints are placed on your individual behavior (e.g., through rules, technology, and work-group norms). You probably make two kinds of conscious decisions: (1) decisions about coming to work, staying with the same organization, and joining other organizations (membership decisions); and (2) decisions about how much to produce, how hard to work, and the quality of workmanship (job-performance decisions). Third, you and others have different needs and goals. You want particular rewards from your work, depending on your gender, race, age, and other characteristics. Of the many rewards that Starbucks offers to its employees, which do you find attractive? Why? In five years, are these same rewards likely to be attractive to you? Fourth, you decide among alternatives based on your perceptions of whether a specific behavior will lead to a desired outcome. You do what you perceive will lead to desired outcomes and avoid doing what you perceive will lead to undesirable outcomes.23 In general, the expectancy model holds that you have your own needs and ideas about what you desire from your work (rewards). You act on these needs and ideas when making decisions about what organization to join and how hard to work. This model also holds that you are not inherently motivated or unmotivated but rather that motivation depends on the situations that you face and how your responses to these situations fit your needs. To help you understand the expectancy model, we must define its most important variables and explain how they operate. The variables are first-level and second-level outcomes, expectancy, instrumentality, and valence. First-Level and Second-Level Outcomes The results of behaviors associated with doing the job itself are called first-level outcomes. They include level of performance, amount of absenteeism, and quality of work. Second-level outcomes are the rewards (either positive or negative) that first-level outcomes are likely to produce. They include a pay increase, promotion, and acceptance by coworkers, job security, reprimands, and dismissal. Expectancy Expectancy is the belief that a particular level of effort will be followed by a particular level of performance. An individual’s degree of expectancy can vary from the belief that there is absolutely no relationship between your effort and performance to the certainty that a given level of effort will result in a corresponding level of performance. Expectancy has a value ranging from 0, indicating you see no chance that a first-level outcome will occur after the behavior, to +1, indicating certainty that a particular first-level outcome will follow from your behavior. For example, if you believe that you have no chance of getting a good grade on the next exam by studying this chapter, your expectancy value would be 0. Having this expectancy, you shouldn’t study this chapter. Good teachers will do things that help their students believe that hard work will help them to achieve better grades. Instrumentality Instrumentality is the relationship between first-level outcomes and second-level outcomes. It can have values ranging from 1 to 1. A 1 indicates that your attainment of a second-level outcome is inversely related to the achievement of a first-level outcome. For example, assume that you are an IBM engineer and want to be accepted as a member of your work group, but it has a norm for an acceptable level of performance. If you violate this norm, your work group won’t accept you. Therefore, you limit your performance so as not to violate the group’s norm. A 1 indicates that the firstlevel outcome is positively related to the second-level outcome. For example, if you received an A on all your exams, the probability that you would achieve your desired Chapter 6 Motivating Employees second-level outcome (passing this course) approaches +1. If there were no relationship between your performance on a test and either passing or failing this course, your instrumentality would be 0. Valence Valence is an individual’s preference for a particular second-level outcome. Outcomes having a positive valence include being respected by friends and coworkers, performing meaningful work, having job security, and earning enough money to support a family. Valence is just not the amount of the reward you receive, but what it means to you upon receiving it. Outcomes having a negative valence are things that you want to avoid, such as being laid off, being passed over for a promotion, or being discharged for sexual harassment. An outcome is positive when it is preferred and negative when it is not preferred or is to be avoided. An outcome has a valence of 0 when you are indifferent about receiving it. Putting It All Together In brief, the expectancy model holds that work motivation is determined by your beliefs regarding effort–performance relationships and the desirability of various work outcomes associated with different performance levels. Simply put, you can remember the model’s important features by the saying: I exert work effort to achieve performance that leads to valued work-related outcomes. The Expectancy Model in Action The five key variables just defined and discussed lead to a general expectancy model of motivation, as shown in Figure 6.5. Motivation is the force that causes you to expend effort, but effort alone isn’t enough. Unless you believe that effort will lead to some desired performance level (first-level outcome), you won’t make much of an effort. The effort–performance relationship is based on a perception of the difficulty of achieving a particular behavior (say, working for an A in this course) and the probability of achieving that behavior. On the one hand, you may have a high expectancy that, if you attend class, study the book, take good notes, and prepare for exams, you can achieve an A in this class. That expectancy is likely to translate into making the effort required on those activities to get an A. On the other hand, you may believe that, even if you attend class, study the book, take good notes, and prepare for exams, your chances of getting an A are only 20 percent. That expectancy is likely to keep you from expending the effort required on these activities to achieve an A. Performance level is important in obtaining desired second-level outcomes. Figure 6.5 shows six desirable second-level outcomes: self-confidence, self-esteem, personal happiness, overall GPA this semester, approval of other individuals, and respect of other individuals. In general, if you believe that a particular level of performance (A, B, C, D, or F) will lead to these desired outcomes, you are more likely to try to perform at that level. If you really desire these six second-level outcomes and you can achieve them only if you get an A in this course, the instrumentality between receiving an A and these six outcomes will be positive. But, if you believe that getting an A in this course means that you won’t gain personal happiness and the approval and respect of other individuals, the instrumentality between an A and these outcomes will be negative. That is, if the higher the grade, the less likely you are to experience personal happiness, you might choose not to get an A in this course. Once you have made this choice, you will lessen your effort and start cutting class, not studying for exams, and so on. Researchers are still working on ways to assess how leaders can use this model to affectively motivate others to achieve high performance. This has presented some 177 178 Part 2 The Individual in Organizations FIGURE 6. 5 Expectancy Model in Action Effort • Attend class • Study • Take notes • Prepare for exams First-Level Outcomes Second-Level Outcomes Performance: Grade in Class Self-confidence A B C D F Self-esteem Personal happiness Overall GPA this semester Expectancy: Perceived probability of successful performance, given effort. Approval of other people Respect of other people Instrumentality: Perceived probability of receiving a second-level outcome, given successful performance. Source: VandeWalle, D., Cron, W. L., and Slocum, J. W. The role of goal orientation following performance feedback. Journal of Applied Psychology, 2001, 86, 629–640. problems.24 First, the model tries to predict choice or the amount of effort an individual will expend on one or more tasks. However, there is little agreement about what constitutes choice or effort for different individuals. Therefore, this important variable is difficult to measure accurately. Second, the model doesn’t specify which second-level outcomes are important to a particular individual in a given situation. Although researchers are addressing this issue, comparison of the limited results to date is often difficult because each study is unique. Take another look at the second-level outcomes in Figure 6.5. Would you choose them? What others might you choose? Third, the model contains an implicit assumption that motivation is a conscious choice process. That is, the individual consciously calculates the pain or pleasure that he expects to attain or avoid when making a choice. The expectancy model says nothing about unconscious motivation or personality characteristics. In fact, individuals often do not make conscious choices about which outcomes to seek. Can you recall going through this process concerning your grade while taking this course? Lastly, the model works best in cultures that emphasize internal attribution. The expectancy model works best when individuals in a culture believe that they can control their work environment and their own behavior, such as in the United States, Canada, and the United Kingdom.25 In cultures where individuals believe the work environment and their own behavior aren’t completely under their control, such as in Brazil, Saudi Arabia, Iran, Japan, and China, the assumptions of the model might not be valid. For example, a Canadian manager in Japan decided to promote one of her young female Japanese sales representatives to manager (a status and monetary reward). To her surprise, the promotion diminished the new Japanese manager’s performance. Why? Japanese Chapter 6 Motivating Employees 179 have a high need for harmony—to fit in with their colleagues. The promotion, an individualistic reward, separated the new manager from her colleagues, embarrassed her, and therefore diminished her work motivation. Insights for Leaders The expectancy model has some important implications for motivating employees. These implications can be grouped into a number of suggestions for action.26 We present five of these here for your consideration: 1. Leaders should try to determine the outcomes that each employee values. Two ways of doing so are observing employee reactions to different rewards and asking employees about the types of rewards they want from their jobs. However, leaders must recognize that employees can and do change their minds about desired outcomes Self Insight over time. 2. Leaders should define good, adequate, and poor perHigh performance is not a matter of formance in terms that are observable and measurable. chance, it is a matter of choice; it is not a Employees need to understand what is expected of them thing to be waited for, it is a thing to be and how these expectations affect performance. When achieved. Johnson & Johnson announced the production of a new Kevin Elliott, Senior Vice President, Merchandising, examination table for doctors, its salespeople wanted 7-11 to know what behaviors, such as cold-calling on new accounts or trying to sell the new tables to their existing accounts, would lead to more sales. To the extent that the company was able to train its salespeople in selling its new product, it was able to link salespeople’s efforts with performance.27 3. Leaders should be sure that the desired levels of performance set for employees can be attained. If employees feel that the level of performance necessary to get a reward is higher than they can reasonably achieve, their motivation to perform will be low. For example, Nordstrom tells its employees: “Respond to Unreasonable Customer Requests.” Employees are urged to keep scrapbooks that record “heroic” acts, such as hand-delivering items purchased by phone to the airport for a customer leaving on a last-minute business trip, changing a customer’s flat tire, or paying a customer’s parking ticket when in-store gift wrapping has taken longer than expected. It is hardly surprising that Nordstrom pays its employees much more than they could earn at a rival store. For those who love to sell and can meet its demanding standards, Nordstrom is nirvana. 4. Leaders should directly link the specific performance they desire to the outcomes desired by employees. Recall the discussion in Chapter 5 of how operant conditioning principles can be applied to improve performance. If an employee has achieved the desired level of performance for a promotion, the employee should be promoted as soon as possible. If a high level of motivation is to be created and maintained, it is extremely important for employees to see clearly and quickly the reward process at work. Concrete acts must accompany statements of intent in linking performance to rewards. 5. Leaders should never forget that perceptions, not reality, determine motivation. Too often, leaders misunderstand the behavior of employees because they tend to rely on their own perceptions of the situation and forget that employees’ perceptions may be different. Intuit uses many of these suggested actions to motivate its employees. As described in the following Communication Competency feature, managers at Intuit understand that there are many ways besides a simple “thank-you” to communicate how much they appreciate the efforts of their employees.28 180 Part 2 The Individual in Organizations Communication competency Intuit Headquartered in Mountain View, California, Intuit is a $3.1 billion maker of well-known software programs, such as Quicken and Turbo-Tax. With more than 8,000 employees, the company has offices throughout the United States, United Kingdom, and Canada. One of the internal programs that makes Intuit a great place to work is their Thanks Program. At each company location, giving out a small award is a part of every leader’s job. The company’s philosophy is that awards should only be given to people who perform well above what is expected. Getting an award is special—it is Intuit’s way to recognize excellence and communicate appreciation. Leaders decide the criteria that will be used for giving awards and they decide what awards to give. Examples of awards given include gift certificates to restaurants, movie tickets, handwritten thank-you notes, and a Night-on-the-Town. Why do employees get these awards? Some employees get awards for going beyond the call of duty to help out their colleagues. Some get awards for making suggestions that save Intuit money. Some get awards for technical programming achievement or outstanding service to the community. Intuit gives team leaders the authority to make decisions about awards. To make sure that team leaders use sound judgment when giving awards, Intuit developed a website designed to help team leaders. It explains the importance of linking the awards they give to achieving business objectives. It also helps leaders ensure that awards given out are valued by individuals. To monitor how employees feel about the Thanks Program, Intuit includes a question in the annual employee satisfaction survey that reads “I am rewarded and recognized when I do a great job.” As long as employees continue to agree with this statement, Intuit senior leaders believe that the Thanks Program is working and helping Intuit to be named as one of Fortune’s “100 Best Companies to Work for in America.” To learn more about Intuit, go to www.intuit.com. Learning Goal 5. Explain how treating individuals fairly influences their motivation to work. Ensuring Equity Feelings of unfairness were among the most frequent sources of job dissatisfaction reported to Herzberg and his associates. Some researchers have made this desire for fairness, justice, or equity a central focus of their models. Assume that you just received a 5 percent raise. Will this raise lead to higher performance, lower performance, or no change in performance? Are you satisfied with this increase? Would your satisfaction with this pay increase vary with the consumer price index, with what you expected to get, or with what others in the organization performing the same job and at the same performance level received? Equity Model: Balancing Inputs and Outcomes The equity model focuses on an individual’s feelings of how fairly she is treated in comparison with others.29 It is based on the belief that individuals are motivated to maintain a fair, or equitable, relationship between themselves and others and to avoid relationships that are unfair or inequitable. It contains two major assumptions. The first is that individuals evaluate their interpersonal relationships just as they would evaluate the buying or selling of a home, shares of stock, or a car. The model views relationships as Chapter 6 Motivating Employees exchange processes in which individuals make contributions and expect certain results. The second assumption is that individuals don’t operate in a vacuum. They compare their situations to those of the others in the organization to determine fairness. In other words, what happens to individuals is important when they compare themselves to similar others (e.g., coworkers, relatives, and neighbors). General Equity Model The equity model is based on the comparison of two variables: inputs and outcomes. Inputs represent what an individual contributes to an exchange; outcomes are what an individual receives from the exchange. Some typical inputs and outcomes are shown in Table 6.4. A word of caution: The items in the two lists aren’t paired and don’t represent specific exchanges. According to the equity model, individuals assign weights to various inputs and outcomes according to their perceptions of the situation. Because most situations involve multiple inputs and outcomes, the weighting process isn’t precise. However, individuals generally can distinguish between important and less important inputs and outcomes. After they arrive at a ratio of inputs and outcomes for themselves, they compare it with their perceived ratios of inputs and outcomes of others who are in the same or a similar situation. These relevant others become the objects of comparison for individuals in determining whether they feel equitably treated.30 Equity exists whenever the perceived ratio of a person’s outcomes to inputs equals that for relevant others. For example, an individual may feel properly paid in terms of what he puts into a job compared to what other workers are getting for their inputs. Inequity exists when the perceived ratios of outcomes to inputs are unequal. Jay Loar, a director of program engineering at Lockheed Martin, works harder than his coworkers, completes all his tasks on time even though others don’t, and puts in longer hours than others, but receives the same pay raise as the others. What happens? Loar believes that his inputs are greater than those of his coworkers and therefore should merit a greater pay raise. Inequity can also occur when individuals are overpaid. In this case, the overpaid employees might be motivated by guilt or social pressure to work harder to reduce the imbalance between their inputs and outcomes and those of their coworkers. Consequences of Inequity Inequity causes tension within and among individuals. Tension isn’t pleasurable, so individuals are motivated to reduce it to a tolerable level, as illustrated in Figure 6.6. To TABLE 6.4 Examples of Inputs and Outputs in Organizations INPUTS OUTCOMES Age Attendance Interpersonal skills, communication skills Job effort (long hours) Level of education Past experience Performance Personal appearance Seniority Social status Technical skills Training Challenging job assignments Fringe benefits Job perquisites (parking space or office location) Job security Monotony Promotion Recognition Responsibility Salary Seniority benefits Status symbols Working conditions 181 182 Part 2 The Individual in Organizations FIGURE 6.6 Inequity as a Motivational Process Individual perceives inequity Individual experiences tension Individual takes action Individual wants to reduce tension reduce a perceived inequity and the corresponding level of tension, individuals may choose to act in one or more of the following ways: • Individuals may either increase or decrease their inputs to what they feel to be an equitable level. For example, individuals who think they are underpaid may reduce the quantity of their production, work shorter hours, and be absent more frequently. Individuals may change their outcomes to restore equity. Many union organizers • try to attract nonmembers by pledging to improve working conditions, hours, and pay without an increase in employee effort (input). • Individuals may distort their own inputs and outcomes. As opposed to actually changing inputs or outcomes, individuals may mentally distort them to achieve a more favorable balance. For example, individuals who feel inequitably treated may distort how hard they work (“This job is a piece of cake”) or attempt to increase the importance of the job to the organization (“This really is an important job!”). • Individuals may leave the organization or request a transfer to another department. In doing so, they hope to find an equitable balance. • Individuals may shift to a new reference group to reduce the source of the inequity. The star high school athlete who doesn’t get a scholarship to a major university might decide that a smaller school has more advantages, thereby justifying a need to look at smaller schools when making a selection. • Individuals may distort the inputs or outcomes of others. They may come to believe that others in a comparison group actually work harder than they do and therefore deserve greater rewards. How susceptible are you to the temptation to cheat a little in order to achieve what you believe is equitable?31 To find out, take a few minutes to consider the situations posed in the following Ethics Competency feature. When individuals feel it is okay to cheat in order to meet their goals and obtain the rewards offered by their employer, whose responsibility is it? Are the employees at fault? Is their management responsible? Or is it just “the system” that is to blame?32 Ethics competency How Tempted Are You? Read each situation. Then indicate how tempted you feel to act in ways that might be viewed as questionable. Try to be candid. Your answers will help you recognize tempting situations when they present themselves. How Tempted Are You? Not at All; Would Not Cheat 1 2 3 Very Tempted; Probably Would Cheat 4 5 6 7 Chapter 6 _____ 1. You work in a retail store selling clothes. Your goal for the week is to sell $4,000 worth of merchandise. Achieving your goal earns you a red recognition ribbon for your name badge. You have sold $3,950 with one hour of time left. A colleague is in a similar situation and proposes that you each spend $50 to purchase items from each other to achieve your goals. Do you go along with your friend’s suggestion? _____ 2. The situation is almost the same as #1 above, but the reward is different. Besides the recognition ribbon, you will receive a $100 bonus if you meet your goal. Do you agree to work with your friend to reach the sales goal? _____ 3. You work in a call center for a catalog company. The company monitors calls to measure service quality and also gives extra points to employees who process calls quickly. Your service quality is excellent but your speed is too slow. Your sister offers to help by posing as a caller. She’ll keep calling until she gets you, and then ask a simple question so you can have a few fast calls. She says she learned this trick where she works, where people do it all the time. Do you tell her to call you? _____ 4. You clean windows in homes during the summer to help pay for your college costs. You are paid by the size and number of windows you clean. You are Motivating Employees 183 responsible for counting the number of windows and estimating the sizes. Most of the homes you work on have a lot of windows. You are pretty sure the home owners don’t really know how many windows they have. You suspect that you could easily charge for two extra windows without being caught. Do you do it? _____ 5. You deliver frozen food products to grocery stores. To maximize profits, your employer sets goals for a variety of performance metrics. One measure used is fuel efficiency. You find it difficult to meet the fuel goals, but have figured out that one solution is to carry more products on each trip. The only space available is the passenger seat, but if you use that space you cannot keep products at the lower temperature required by state food safety regulations. You learn that other truck drivers bring their own coolers and use them to carry products in the passenger seat. They say it is the only way anyone can meet the fuel goals. Do you bring a cooler to store food on the passenger seat? After answering all of the questions, review your ratings. Most people admit that they would be tempted to cheat in some of these situations. In which types of situations were you most tempted: When the reward was large? When the degree of cheating seemed minor? When you believed you wouldn’t get caught? Procedural Justice: Making Decisions Fairly Equity theory focuses on the outcomes individuals receive after they have expended effort, time, or other inputs. It doesn’t deal with how decisions leading to outcomes were made in the first place. Procedural justice examines the impact of the process used to make a decision. As we defined in Chapter 2 on page 46, procedural justice refers to the perceived fairness of the rules, guidelines, and processes for making decisions.33 Procedural justice holds that employees will be more motivated to perform at a high level when they perceive as fair the procedures used to make decisions about the distribution of outcomes. Procedural justice is important to most employees. They are often motivated to attain fairness in how decisions are made, as well as in the decisions themselves. Reactions to pay raises, for example, are greatly affected by employees’ perceptions about the fairness of how the raises were determined. If in the minds of the employees the pay raises were administered fairly, the employees are usually more Part 2 The Individual in Organizations satisfied with their increases than if the employees judged the procedures used to make these increases to be unfair. The perceived fairness of the procedures used to allocate pay raises is a better predictor of satisfaction than the absolute amount of pay received. ViewCast Corporation is a digital encoding company that makes equipment that digitizes live programming for transmission over the Internet. David Stoner, ViewCast’s president, announced that because of the financial conditions facing the company, all salaries would be frozen. While employees were not pleased with this announcement, they understood how the recent recessions had impacted ViewCast and its industry. Many were grateful just to have a job and were willing to forgo pay raises in the short term. In both the pay and evaluation situations, the individual can’t directly control the decision but can react to the procedures used to make it. Even when a particular decision has negative outcomes for the individual, fair procedures help ensure that the individual feels that her interests are being protected.34 Employees’ assessments of procedural justice have also been related to their trust in management, intention to leave the organization, evaluation of their supervisor, employee theft, and job satisfaction. Consider some of the relatively trivial day-to-day issues in an organization that are affected by procedural justice: decisions about who will cover the phones during lunch while others are away from their desks, the choice of the site of the company picnic, or who gets the latest software for a personal computer. Procedural justice has also been found to affect the attitudes of workers who survive a layoff. During the recent recession when Caterpillar, Bank of America, Microsoft, and hundreds of other companies laid off thousands of employees, the survivors (those who remain on the job) are often in a good position to judge the fairness of the layoff in terms of how it was handled. When a layoff is handled fairly, survivors feel more committed to the organization than when they believe that the laid-off workers were treated unfairly. In Chapter 8, we discuss how survivors of layoffs also experience stress and some actions that they can take to relieve it. DUNCAN SMITH/PHOTODISC/GETTY IMAGES 184 ▲ Organizational citizenship behavior may include one employee helping another with a computer problem. Going Beyond the Call of Duty In many organizations, employees perform tasks that are not formally required.35 Organizational citizenship behavior exceeds formal job duties and is often necessary for the organization’s survival, including its image and acceptance. Examples of organizational citizenship behavior include helping coworkers solve problems, making constructive suggestions, and volunteering to perform community service work (e.g., blood drives, United Way campaigns, and charity work). Although not formally required by employers, these behaviors are important in all organizations. Helping coworkers is an especially important form of organizational citizenship behavior when it comes to computers. Every organization has its computer gurus, but often it’s the secretary who doesn’t go to lunch who can easily fix a problem and do it without insulting the struggling user. Leaders often underestimate the amount of this informal helping that takes place in organizations. Employees have considerable discretion over whether to engage in organizational citizenship behaviors. Employees who have been treated fairly and are satisfied are more likely to do so than employees who feel unfairly treated. Fairly treated employees engage in citizenship behaviors because they want to give something back to the organization. Most individuals desire to have fair exchanges with coworkers and others in their organization. Chapter 6 Motivating Employees 185 Barbara Thomas, manufacturing applications sales manager for Hewlett-Packard: EDS, developed a simple yet innovative method for acknowledging organizational citizenship behaviors at her office. At the beginning of the year, Thomas gives each of her 10 employees a jar containing 12 marbles. Throughout the year, employees may give marbles to others who have helped them in some way or who have provided an extraordinary service. Employees are recognized throughout the year and are proud of the number of marbles they accumulate, even though they receive no monetary reward from Thomas. Insights for Leaders Leaders often use the equity model in making a variety of decisions, such as taking disciplinary actions, giving pay raises, allocating office and parking space, and dispensing other perquisites (perks). The equity model leads to two primary insights for leaders. First, employees should be treated fairly. When employees believe that they are not being treated fairly, they will try to correct the situation and reduce tension by means of one or more of the types of actions identified previously in this section. A sizable inequity increases the probability that individuals will choose more than one type of action to reduce it. For example, employees may partially withdraw from the organization by being absent more often, arriving at work late, not completing assignments on time, or stealing. Leaders may try to reduce the inputs of such employees by assigning them to monotonous jobs, taking away some perks, and giving them only small pay increases. Second, employees make decisions concerning equity only after they compare their inputs and outcomes with those of comparable employees.36 These relevant others may be employees of the same organization or of other organizations. The latter presents major problems for leaders, who cannot control what other organizations pay their employees. For example, Ralph Sorrentino, a partner at Deloitte Consulting, hired a recent business school undergraduate for $54,500, the maximum the company could pay for the job. The new employee thought that this salary was very good until she compared it to the $65,250 that fellow graduates were getting at Boston Consulting, McKinsey, or Bain. She felt that she was being underpaid in comparison with her former classmates, causing an inequity problem for her (and the company). The idea that fairness in organizations is determined by more than just money has received a great deal of attention from leaders. Organizational fairness is influenced by how rules and procedures are used and how much employees are consulted in decisions that affect them. Chapter Summary A six-stage motivational model indicates that individuals behave in certain ways to satisfy their needs. Leaders have three motivational challenges: Motives can only be inferred, needs are dynamic, and there are considerable differences in individuals’ motivations. 1. Explain basic Two human needs models of motivation are widely recognized. Maslow proposed that individuals have five types of needs: physiological, security, affiliation, esteem, and self-actualization, and that when a need is satisfied it no longer motivates a person. McClelland believed that individuals have three learned needs (achievement, power, and affiliation) that are rooted in the culture of a society. We focused on the role of the achievement need and indicated the characteristics associated with high achievers, including that they like to set their own moderate goals and perform tasks that give them immediate feedback. 2. Describe two basic motivational processes. human needs approaches to motivation. 186 Part 2 3. Explain how to design motivating jobs. 4. Describe how expectations can lead to high performance. 5. Explain how treating individuals fairly influences their motivation to work. The Individual in Organizations Herzberg claimed that two types of factors affect a person’s motivation: motivator and hygiene factors. Motivators, such as job challenge, lead to job satisfaction but not to job dissatisfaction. Hygiene factors, such as working conditions, prevent job dissatisfaction but can’t lead to job satisfaction. Leaders need to structure jobs that focus on motivators because they lead to high job satisfaction and performance. The job characteristics model focuses on adding five motivators to the job (skill variety, task identity, task significance, autonomy, and feedback). Whether an employee responds favorably to an enriched job is dependent on her knowledge and skill, growth-need strength, and contextual factors. The expectancy model holds that individuals know what they desire from work. They choose activities only after they decide that the activities will satisfy their needs. The primary components of this model are first- and second-level outcomes, expectancy, instrumentality, and valence. An individual must believe that effort expended will lead (expectancy) to some desired level of performance (first-level outcome) and that this level of performance will lead (instrumentality) to desired rewards (second-level outcomes and valences). Otherwise, the individual won’t be motivated to expend the effort necessary to perform at the desired level. The equity model focuses on the individual’s perception of how fairly he is treated in comparison to others in similar situations. To make this judgment, an individual compares his inputs (experience, age) and outcomes (salary) to those of relevant others. If equity exists, the person isn’t motivated to act. If inequity exists, the person may engage in any one of six behaviors to reduce this inequity. Both procedural justice and organizational citizenship behavior are based on the equity model and have significant implications for employees’ perceptions of equity. Procedural justice examines the impact of the process (rules and procedures) used to make a decision. Organizational citizenship behaviors are employee behaviors that go above and beyond their job requirements. Key Terms and Concepts Ability, 159 Achievement motivation model, 164 Affiliation needs, 162 Autonomy, 171 Contextual factors, 173 Deficiency needs, 163 Equity model, 180 Esteem needs, 162 Expectancy, 176 Expectancy model, 175 Extrinsic factors, 169 First-level outcomes, 176 Goal, 160 Growth-need strength, 173 Growth needs, 163 Hygiene factors, 169 Inequity, 181 Inputs, 181 Instrumentality, 176 Intrinsic factors, 169 Job characteristics model, 170 Job feedback, 171 Motivating potential score (MPS), 171 Motivation, 158 Motivator factors, 169 Motivator–hygiene model, 169 Need for achievement, 163 Need for affiliation, 164 Need for power, 163 Needs, 159 Needs hierarchy model, 161 Organizational citizenship behavior, 184 Outcomes, 181 Physiological needs, 162 Second-level outcomes, 176 Security needs, 162 Self-actualization needs, 162 Skill variety, 171 Task identity, 171 Task significance, 171 Thematic Apperception Test (TAT), 165 Valence, 177 Vertical loading, 173 Chapter 6 Motivating Employees 187 Discussion Questions 1. 2. 3. 4. To explore how Starbucks motivates its partners, go to www.starbucks.com. On that page, look for “career center.” Click on that. What employee needs is Starbucks attempting to satisfy for its retail partners? Go to www.starbucks.com, click on “about us,” then click on “business ethics & compliance.” Click on the link that shows all versions of Starbucks Standard of Business Conduct on the right-hand side of the screen. Scroll down to resources under which you will find Ethical DecisionMaking Framework. What motivational concepts do you find Starbucks drawing on in this section? Phil Jackson, after winning his tenth NBA title as a coach, said: “I don’t motivate my players. You cannot motivate someone. All you can do is provide a motivating environment and the players will motivate themselves.” Do you agree or disagree? What’s the reasoning behind your answer? Focus on some aspects of your own work in which you feel your performance is below your own expectations. Using your answers from Table 6.3, explore some of the reasons for your level of performance. 5. How has John Schnatter, CEO of Papa John’s, applied the learned needs model to motivate his employees? 6. What are your own assumptions about motivation? How do they reflect the culture in which you were raised? 7. Why is job satisfaction not strongly related to job performance? 8. Why are some individuals motivated to cheat? 9. Imagine that you have been selected for an office visit at SEI Investments for a financial analyst position. What are leaders looking for in that interview to decide whether or not to hire you? 10. Imagine that you have just been selected to become a new sales manager for Dell Computers in Mexico. What would you do to motivate employees to become high producers? Experiential Exercise and Case Experiential Exercise: Self Competency37 What Do You Want from Your Job? We have listed the 16 most often mentioned characteristics that individuals want from their jobs in random order. Please rank them in order of both their importance to you and then in terms of satisfaction for you. Rank these characteristics 1 (most important), 2 (next most important), and so on, through 16 (least important). Use the same procedure to rank satisfaction. Then compare your answers with those of hundreds of managers working in a variety of jobs and industries provided at the end of this exercise. 11. Recognition from team _____ members _____ 12. Vacation time _____ _____ 13. Regular hours _____ _____ 14. Working close to home _____ _____ 15. Little job stress _____ _____ 16. A job in which I can help _____ others _____ Job Characteristics Importance Rank Satisfaction Rank 1. Working independently _____ _____ 2. Chance for promotion _____ _____ 3. Contact with people _____ _____ 4. Flexible time _____ _____ 5. Health insurance & other benefits _____ _____ 6. Interesting work _____ _____ Answers given by managers 7. Work important to society _____ _____ 8. Job security (no layoffs) _____ _____ For job importance, the rank order of characteristics is 1–6; 2–14; 3–15; 4–16; 5–1; 6–2; 7–13; 8–3; 9–4; 10–11; 11–7; 12–5; 13–8; 14–12; 15–10; 16–9. For job satisfaction, the rank order of characteristics is 1–3; 2–14; 3–2; 4–16; 5–13; 6–4; 7–9; 8–7; 9–11; 10–12; 11–15; 12–8; 13–5; 14–1; 15–6; 16–10. 9. Opportunity to learn _____ _____ 10. High income _____ _____ Questions 1. What things influenced your ranking? What motivational concepts did you rely on for making your decisions? 2. What aspects gave you the most job satisfaction? Why? 188 Part 2 The Individual in Organizations Case: Communication Competency SAS Institute38 Jim Goodnight founded the SAS Institute in Cary, North Carolina, in 1976. It is probably the least-well-known, major privately owned software company in the world. In simplest terms, SAS writes software that makes it possible to gather and understand data, to sift through mountains of information in order to find patterns and meaning. SAS—which stands for “statistical analysis software”— started out as a tool for statisticians. Goodnight originally developed it to analyze agricultural-research data in North Carolina. These days Marriott Hotels uses the software to manage a frequent-visitor program; Merck & Co. and Pfizer Inc. use it to develop new drugs; the U.S. government uses SAS to calculate the Consumer Price Index. The software is not cheap. A charge of $50,000 a year for 50 users is typical. All but 2 of the 100 largest U.S. public companies use it. It sales exceed $2.2 billion annually. The company employs more than 11,000 people worldwide. It has been consistently listed among Fortune magazine’s “100 Best Companies to Work for in America.” Goodnight believes “If you treat employees as if they make a difference to the company, they will make a difference to the company.” What is unique about SAS is not the software it creates but the unusual way in which it does business. The freedom and exuberance associated with the new economy has a dark side: Work is so demanding, so all-consuming, that is can become unsatisfying. In that context, SAS may be the world’s sanest company. Why? First, there’s the mood of the place. SAS operates in a competitive arena full of buzzwords—“data mining,” “knowledge management”—and builds cutting-edge products that set the industry standard. Yet the one word that employees universally use to describe the company’s work environment is “relaxed.” Second, there’s also the stability of the company. It is an article of faith in the software business that the only way to attract and keep talented employees is to offer them stock options, along with extraordinary salaries. SAS, a private company, offers no stock, and its salaries are no better than its competition. But SAS treats its employees so well in other areas—there is no limit on how many sick days they can take; they can even stay home to care of sick family members—that employees remain committed to the company. Its employee turnover rate is low and it has never had a layoff. Third, there’s the sense of balance between work and family life found at SAS. At a time when companies are trying to mix work and family, SAS has the largest on-site day-care operation in North Carolina. To encourage families to eat lunch together, the SAS cafeteria supplies baby seats and high chairs. To encourage families to eat dinner together, the company has adopted a seven-hour workday. Indeed, most people at SAS keep work hours that are far from typical of the new economy. They leave the office by 5 p.m. The history of the company’s benefits is revealing. The story begins when SAS was still a startup in 1976—a startup with a number of women working for it. “Our women employees were two or three years into their careers—at the top of their talent curve—and they started deciding to stay home and have kids,” says Jennifer Mann, vice president of human resources. “We knew and they knew that they’d have to start from scratch if they stepped out. Jim said, ‘We can’t lose those people. We’re too small a company.’ So we started providing day care in the basement. We began with 4 or 5 kids; now we have 528 (including some who attend a nearby private facility).” SAS was by no means obligated to offer day care. It couldn’t, however, afford to lose its female employees. Today 51 percent of SAS managers are women. A group at the company meets monthly to discuss proposed new benefits, evaluating them in the context of a three-part test: Would the benefit accord with SAS’s culture? Would it serve a significant number of employees? And would it be cost accountable— that is, would its perceived value be at least as high as it cost? Every benefit has to pass all three tests. Moreover, Goodnight points out that it is not just the benefits that keep employees at SAS, but “it’s the challenge of work.” The benefits build a foundation of loyalty that supports the bottom line. The payoff starts with turnover. A typical software company of SAS’s size loses 1,000 employees per year. At SAS, the number lost is about 130—which translates into almost 900 employees per year whom SAS doesn’t have to replace. The result is a huge reduction in expenses for recruiting candidates, for flying them in for interviews, and for moving new hires across the country, as well as a reduction in the amount of work time lost while jobs remain unfilled. Two consulting companies—Top Gun and Hewitt—have estimated that the cost of replacing a worker runs between 1 and 2.5 times the salary of the open job. The more sophisticated the job, the higher the cost. Given a factor of 1.5 and an average SAS salary of $50,000, the company arguably saves millions a year, compared with what its competitors spend to attract new employees. The informal environment at SAS can be misleading. This is a company built on accountability. SAS is a decentralized company, but tracks key performance data closely. From his computer, Goodnight can look up detailed sales and performance information; he can track data on technical support calls, which are sorted by product and by timeto-resolution; he can monitor bug reports in new software, noting how quickly testers and developers are eliminating flaws in products headed for release. The sense of accountability also extends to documentation. Every SAS product manual includes the names of the developers and testers who created or updated the software. The sense of accountability is so ingrained and the lines of reporting are so simple that the company needs no formal organization chart. As it grows, SAS tends to get wider—spawning new divisions—rather than adding more layers of management. Indeed, the company is so brutally flat that on the Cary campus, many of the several thousand frontline employees who work there—from housekeepers to coders with Ph.D.s—are just two or three levels in the corporate hierarchy from Jim Goodnight. Chapter 6 Larnell Lennon says that what surprised him most when he arrived at SAS—besides getting his own office—was how his manager spent his time. “My manager is doing what I’m doing,” says Lennon. “She is in the trenches, writing code. Dr. Goodnight was once in the same group that I’m in. At my last job, my manager was just making sure that everything got done. Here, we all do that.” Xan Gregg works in John Sall’s group. Sall has plenty to say “about the details of how code is written,” says Gregg. “That’s unusual for an executive vice president. Usually managers are not very technical.” Sall, an almost impossibly shy and unassuming billionaire, says that he sees himself primarily as “a statistician and a software developer—not a businessperson or a manager.” Managers who understand the work that they oversee can make sure Motivating Employees 189 that details don’t slide. At SAS, groups agree on deadlines, and managers understand what their group does. Unrealistically optimistic promises about timetables and completion dates are relatively rare. Questions 1. Go to Fortune magazine, February 2, 2009, and turn to pages 64–65 or go to www.sas.com and search under the heading “SAS Family.” Using the criteria on these pages, evaluate the SAS Institute. Do these criteria reveal why SAS consistently makes the list of “Best Companies to Work for in America”? 2. What is motivating Jim Goodnight? 3. Would you like to work for SAS? Why or why not? chapter 7 Motivation: Goal Setting and Reward Programs Learning Goals After studying this chapter, you should be able to: 1 Explain how goal setting affects performance. 2 State the effects of goal setting on an individual’s behavior. 3 Describe reward programs for improving performance. Learning Content Learning from Experience Enterprise Rent-A-Car Model of Goal Setting and Performance Teams Competency Jeff Gordon’s Rainbow Warriors Across Cultures Competency Hewlett-Packard Effects of Goal Setting Diversity Competency Lockheed Martin MS2 Team Reward Programs for Improving Performance Change Competency Nucor’s Profit Sharing Program Experiential Exercise and Case Experiential Exercise: Self Competency Goal Setting Case: Diversity Competency Allstate Insurance Company Learning from Experience Enterprise Rent-A-Car airports, but instead focused on customers whose cars were being repaired or who needed a rental for vacations or other special occasions. So, even though Enterprise recently acquired Vanguard Car Rental, a company that manages the Alamo Rent A Car and National Car Rental brands, which rent cars mostly at airports, more than 90 percent of Enterprise’s car rental business still comes from customers in their home cities, as opposed to travelers. Enterprise has a fleet of more than 714,000 vehicles located at more than 7,000 rental shops and revenues exceeding $13 billion. The company opens, on average, one new office every business day somewhere in the world. Enterprise has contracts with 70 percent of the body shops and insurance companies in North America. It provides body shops with a website tracking device that enables these shops to post estimates about when a customer’s car will be ready. This saves the body shop mechanics time because they no longer have to phone customers and give them estimates about when their cars will be ready. Enterprise’s success can be traced to how it manages its employees. All employees start as trainees just like was promoted to assistant branch manager and during the next 12 years was promoted through the ranks to regional vice president. She assumed additional responsibilities as her performance exceeded expectations, including establishing the first national preferred provider rental agreements between Enterprise and auto manufacturers. All Enterprise employees start with a low base salary and earn a sliding percentage of profits generated by their office. Thus, they are highly motivated to push extra services, such as GPS systems, children’s car seats, collision-damage insurance, and the like. They are also rewarded © PERSONS NAME/STOCK COMPANY Nicholson did in 1981 after graduating from the University of Missouri. For nine months, she washed cars, listened to customers, wrote rental agreements, and settled customer complaints. She was taught that if a customer forgets his driver’s license, drive the customer home to pick it up. If the license has expired, drive the customer to a state motor vehicle registration department to obtain a new one. Based on her performance, she To learn more about Enterprise Rent-A-Car, go to www.enterprise.com. JAMES A. FINLEY/AP PHOTO Enterprise Rent-A-Car was founded by Jack Crawford in 1957 and is now run by Pamela Nicholson, the company’s first female president. She is ranked by Fortune magazine as the 44th most powerful woman in the United States. The company started out as a small auto-leasing business and moved into car rentals in the 1960s with a very different business strategy from that of Hertz, Avis, and Budget. It didn’t rent cars at 192 Part 2 The Individual in Organizations for steering customers to other Enterprise outlets that sell preowned cars. Employee turnover is a problem in the carrental industry. Major car rental companies, such as Avis, Budget, National, and Hertz, average more than 30 percent turnover a year, because of the long hours and stress of handling customer complaints. Enterprise, however, has turnover of less than 25 percent. One reason for the lower turnover is that employees work in teams of less than 10 people. In these teams, employees can develop personal relationships with their teammates. Nicholson has set some metrics for how to measure the company’s performance. Enterprise has developed a performance management system that is simple to use and easy for employees to understand. The Enterprise Service Quality Index asks more than 175,000 customers each month these questions: (1) How would you rate your overall experience? and (2) Would you consider renting from Enterprise again? The goal is to achieve a 90 percent positive response. Employees get a chance to see how they’re performing and to respond accordingly. “These scores drive everything at Enterprise,” Nicholson explains. “It determines how much money you make and how you progress in the company. If the office’s Index is below the mark, no one in that branch moves. If it’s above, everyone gets ahead. It’s equitable and it has had a big impact on teamwork.”1 To survive in today’s competitive global market, setting challenging goals that take into account the crucial factors of time and quality and providing feedback to employees are no longer options. They must happen! The motivational practices that produced the achievements at Enterprise are based on setting goals, developing feedback systems, and providing reward systems that get individuals to strive to reach those goals. Goals play an important part in motivating individuals to strive for high performance. The basic concepts in goal setting remain an important source for motivating employees. Regardless of the nature of their specific achievements, successful people tend to set goals. Their lives are goal oriented. This is true for politicians, students, and leaders in all sorts of organizations.2 In this chapter, we begin by presenting a model of goal setting and performance based on the individual. In the next section, we discuss the effects of goal setting on employees’ behaviors. Finally, we conclude the chapter with a discussion of four commonly used reward programs that reinforce desired behaviors of employees. Learning Goal 1. Explain how goal setting affects performance. Model of Goal Setting and Performance Goals are future outcomes (results) that individuals and groups desire and strive to achieve.3 An example of an individual goal is “I intend to graduate with a 3.2 grade point average by the end of the spring semester, 2012.” Goal setting is the process of specifying desired outcomes toward which individuals, teams, departments, and organizations will strive and is intended to increase organizational efficiency and effectiveness. Importance of Goal Setting The goal-setting process is no easy task, but the effort is not only worthwhile, it is also becoming essential for success in today’s highly competitive global business environment. Just as organizations strive to achieve certain goals, individuals also are motivated to strive for and attain goals. In fact, the goal-setting process is one of the most important motivational tools for affecting the performance of employees in Chapter 7 Motivation: Goal Setting and Reward Programs 193 organizations. In this section we consider one of the most widely accepted models of goal setting and indicate how goal-setting techniques can be applied to motivate individuals and teams. Figure 7.1 presents a model of individual goal setting and performance.4 According to this goal-setting model, goal setting has four motivational aspects: • Goals direct attention. That is, they focus an employee’s attention on what is relevant and important. What two goals does Enterprise track? • Goals regulate effort. Not only do goals direct our attention, they motivate us to act. What motivates employees at Enterprise? • Goals increase persistence. Persistence represents the effort expended on a task over an extended period of time. Persistent people find ways to overcome obstacles and avoid making excuses if they fail. • Goals foster strategies and action programs. Goals encourage people to develop strategies and action programs that enable them to achieve their goals. Give an example of this at Enterprise. FIGURE 7.1 Motivational Aspects of Goal Setting Directing one’s attention Regulating one’s effort Goals motivate the individual by… Task performance Increasing one’s persistence Encouraging the development of goal-attainment strategies or action programs Source: E. A. Locke and G. P. Latham, A Theory of Goal Setting and Task Performance. Englewood Cliffs, NJ: Prentice Hall, 1990. © 1990. Adapted and reprinted by permission of the author. 194 Part 2 The Individual in Organizations Figure 7.2 presents a version of this model. It shows the key variables and the general relationships that can lead to high individual performance, some of which we have discussed in previous chapters. The basic idea behind the model in Figure 7.2 is that a goal serves as a motivator because it allows people to compare their present performance with that required to achieve the goal. To the extent that people believe they will fall short of a goal, they will feel dissatisfied and work harder to attain it as long as they believe that it can be achieved. Having a goal also may improve performance because the goal makes clear the type and level of performance expected. At PPG, a Pittsburgh-based paint and glass manufacturer, employee objectives are called SMART goals, an acronym for “Specific, Measurable, Agreed-upon by the employee and manager, Realistic, and Timebound.” Being specific means goals should be stated in precise rather than vague terms. Measurable refers to assessing the extent to which a goal is accomplished. Goals should be attainable, challenging, and realistic. Impossible goals reduce motivation because people do not like to fail. Results-oriented goals are needed to support the organization’s mission. At Enterprise if they get a positive response to their survey questions, which are results oriented, then the organization’s goal will be achieved. Finally, timebound means that goals need to specify target dates for completion. Before the SMART goal system was implemented at PPG, a sales manager would be told by her boss to increase sales for the next year. Now she might be asked to develop, by September 30, three new customers in three Southeast regions with annual sales volume of $250,000 each. Using SMART, sales performance at PPG has increased by more than 25 percent.5 Challenge Performance is likely to be high when (1) challenging goals have been set, (2) the moderators (ability, goal commitment, feedback, and task complexity) are present, and (3) the mediators (direction, effort, persistence, and task strategy) are operating (see Figure 7.2). Stated another way, goal setting is the process of developing, negotiating, and establishing targets that challenge the individual. Employees with unclear goals or FIGURE 7.2 Model of Goal Setting Challenge Goal difficulty Goal clarity Self-efficacy Mediators Direction Effort Persistence Task strategy Moderators Ability Goal commitment Feedback Task complexity Performance Rewards Satisfaction Consequences Source: Adapted from Locke, E. A., and Lantham, G. P. A theory of Goal Setting and Task Performance. Englewood Cliffs, NJ: Prentice Hall, 1990, 253. Chapter 7 Motivation: Goal Setting and Reward Programs 195 no goals are more prone to work slowly, perform poorly, exhibit a lack of interest, and accomplish less than employees whose goals are clear and challenging. In addition, employees with clearly defined goals appear to be more energetic and productive. They get things done on time and then move on to other activities (and goals). Goals may be implicit or explicit, vague or clearly defined, and self-imposed or externally imposed. Whatever their form, goals serve to guide the individual’s time and effort. Two key attributes of challenging goals are particularly important: • • Goal difficulty: A goal should be challenging but not impossible to achieve. If it is too easy, the individual may delay or approach the goal lackadaisically. If it is too difficult, the individual may not really accept the goal and thus not try to meet it. Goal clarity: A goal must be clear and specific if it is to be useful in directing effort. The individual thus will know what is expected and not have to guess. For instance, Enterprise rental agents are expected to answer customers’ calls by the third ring of the phone. Clear and challenging goals lead to higher performance than do vague or general goals. Management by objectives (MBO) is a management system that uses goal difficulty and goal clarity as its foundation for motivating employees. In essence, this management system involves managers and employees in jointly setting goals for performance and personal development, periodically evaluating employees’ progress toward achieving these goals, and then rewarding employees. One company that has made extensive use of management by objectives is Cardinal Health, an integrated health-care solutions provider located in Dublin, Ohio. At the beginning of each year, all 55,000 employees are asked to identify at least one performance objective that supports one of the four corporate goals of growth, operational excellence, leadership development, and customer focus. In addition, at the end of the year, managers are asked to rate employees on a set of core leadership competencies, such as self-management, teamwork, sound judgment, and relationship building. By combining the ratings from the manager with those from the employees, Cardinal has been able to show how MBO leads to both employee satisfaction and profits. Cardinal managers have found that goals that are difficult but not imposCommunication Insight sible lead to higher performance than do easy goals. However, unrealistically high goals may not be accepted or may lead to The list of things that we tell new high performance only in the short run.6 Individuals eventually employees includes an opportunity to get discouraged and stop trying, as predicted by the expectancy be a part of something big, respect model (see Chapter 6). others, straight talk, open dialogue, Along with goal difficulty and clarity, a third key factor good stewardship and a commitment to that influences the establishment of challenging goals is selflearn from each other. efficacy. In Chapter 5, we defined self-efficacy as the individual’s Pamela Nicholson, President, Enterprise Rent-A-Car estimate of his or her own ability to perform a specific task in a particular situation. As might be expected, individuals who set high goals perform at a high level when they also have high selfefficacy. A person’s self-efficacy is dependent on the task. For example, a golfer with a low handicap has high self-efficacy on the golf course. But the same person might have low self-efficacy when meeting sales goals for a new piece of equipment that the company has just introduced.7 With clear and challenging goals, employee behaviors are more likely to be focused on job-related tasks, high levels of performance, and goal achievement. Table 7.1 provides a summary of the key links between goal setting and individual performance. The following Teams Competency feature illustrates how people in teams use the basic concepts of goal challenge, goal clarity, and self-efficacy to instill teamwork. In NASCAR racing, it costs $20 million to $25 million a year to keep a driver and crew in all 36 NASCAR races. Winning is often determined by how well the pit crew performs tire changes, refueling, and other tasks. Most times, the difference between Part 2 The Individual in Organizations TABLE 7.1 Impact of Goals on Performance WHEN GOALS ARE PERFORMANCE WILL TEND TO BE Specific and clear Higher Vague Difficult and challenging Easy and boring Set participatively Set by management (top down) Accepted by employees Rejected by employees Accompanied by rewards Unrelated to rewards Lower Higher Lower Higher Lower Higher Lower Higher Lower winning a NASCAR race and placing second is a matter of seconds and these can either be gained or lost when the driver comes in for a pit stop. Fourteen seconds or less is a goal for pit crews to make all the needed changes for the driver. For example, if the crew drops a lug nut when changing a tire, the driver will spend about half a second longer in the pit, which is equivalent to about 180 feet of track.8 Teams competency Jeff Gordon’s Rainbow Warriors JARED C. TILTON/AI WIRE/LANDOV 196 The Rainbow Warriors, Jeff Gordon’s pit crew, work as a team with Gordon to win races. During his career, Jeff Gordon has driven in 545 NASCAR races and won 67 races, four titles, and nearly $98 million in prize money. He’s won more Chase Sprint Cup races than any other NASCAR driver. Gordon and his Rainbow Warriors, so named because of their rainbow-striped jumpsuits, decided to go their separate ways after the 2007 racing season and Gordon did not win a Chase Sprint Cup race in 2008 for the first time in his career. In 2009, Steve Letarte, considered by many NASCAR people to be a premier crew chief, and the Rainbow Warriors rejoined Gordon’s team. Together, Gordon and Letarte credit much of their success to the pit crew. When the Rainbow Warriors crew was assembled, its members decided to do things differently. In the past, mechanics who had worked on a race car all week also suited up on Sunday to work as the pit crew. The car was the number one priority. The crew relied on horsepower and the driver to win the race. Pit crews didn’t practice and set goals. But Letarte and Gordon knew that all drivers have essentially the same equipment, so they thought the ingredient that would separate winning from losing drivers was their ability to create a team. They decided to have two crews: The first crew was responsible for the mechanics of the car (e.g., engine and suspension components); the second—the pit crew— was responsible for the car during the race. Under Letarte and Gordon’s leadership, the team hired a coach to develop the teamwork competency of the pit crew. Training included Chapter 7 Motivation: Goal Setting and Reward Programs rope climbing, scaling walls, wind sprints, guys carrying each other on their backs, and the like. All members of the pit crew were trained to perform all necessary tasks so that they could rotate tasks among themselves, depending on race conditions. By analyzing other NASCAR drivers, Letarte determined that if Gordon’s car could leave the pit 1 second faster than the competition’s cars, Gordon would gain 300 feet on the competition (a car going 200 mph travels nearly 300 feet a second). The pit crew set a goal of having the car exit the pit in 13 seconds or less because races are often decided by less than 1 second between the first and second place car. During a race, all crew members listen to each other on their scanners. They use special code words to signal whether they are changing two or four tires when Gordon pulls into the pit. The crew also determines whether to gas the car fully or just to put in enough gas to finish the race. Letarte and his crew also determine when Gordon should come in for a pit stop. Before the race, all the Rainbow Warriors sit in a circle to discuss race strategy. The circle symbolizes that the team is stronger than any individual. When Gordon wins a race, signs a personal services contact, or is paid to sign autographs, all members of both crews receive a percentage of that money. To learn more about Jeff Gordon, go to www.jeffgordon.com. Moderators Moderators act like a volume control on a TV set. By increasing or decreasing moderators, the strength between challenge and the mediators changes. Figure 7.2 shows the four moderators that buffer the relationship between goals and performance: ability, goal commitment, feedback, and task complexity. We begin with ability because it limits an individual’s capacity to respond to a challenge. Ability The relation of goal difficulty to performance is curvilinear, not linear. That is, performance levels off as the limits of a person’s ability are approached. In Chapter 6, we learned that motivation is an important part of a person’s ability to perform. Some individuals believe that they have the ability to acquire new competencies and master new situations. They seek challenging new assignments that open their eyes to new ways of doing tasks. Others believe that their ability to complete a task is relatively stable and avoid placing themselves in a situation in which they might receive a negative evaluation.9 Goal Commitment The second factor, goal commitment, refers to an individual’s determination to reach a goal, regardless of whether the goal was set by that person or someone else.10 What is your goal commitment in this class? Take a minute and complete the questionnaire in Table 7.2. Your commitment to achieve a goal is likely to be stronger if you make it publicly, if you have a strong need for achievement, and if you believe that you can control the activities that will help you reach that goal. The effect of participation on goal commitment is complex. Positive goal commitment is more likely if employees participate in setting their goals, which often leads to a sense of ownership. In a study by the Corporate Leadership Council of 50,000 employees, the council found that increased commitment can lead to a 57 percent improvement in discretionary effort—employees’ willingness to exceed the normal job duties. That effort produces, on the average, a 20 percent individual performance improvement and an 87 percent reduction in a desire to leave the organization. Not expecting or wanting to be involved in goal setting reduces the importance of employee participation in terms of goal commitment. Even when a leader has to assign goals without employee participation, doing so leads to more focused efforts and better performance than if no goals are set or if a person is told simply to “do their best.”11 197 198 Part 2 The Individual in Organizations TABLE 7.2 Goal Commitment Questionnaire RESPONSE CATEGORY ITEM 1. I am strongly committed to achieving a grade of _____. 2. I am willing to expend the effort needed to achieve this goal. 3. I really care about achieving this grade. 4. Much personal satisfaction can be gained if I achieve this grade. 5. Revising my goal, depending on how other classes go, isn’t likely. 6. A lot would have to happen to abandon my grade goal. 7. Expecting to reach my grade goal in this class is realistic for me. STRONGLY STRONGLY AGREE AGREE UNDECIDED DISAGREE DISAGREE _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Scoring: Give yourself 5 points for each Strongly Agree response; 4 points for each Agree response; 3 points for each Undecided response; 2 points for each Disagree response; and 1 point for each Strongly Disagree response. The higher your total score, the greater is your commitment to achieve your grade goal in this class. Source: Adapted from Cron, Wm. L., Slocum, J. W., Jr., VandeWalle, D. and Fu, F. The role of goal orientation on negative emotions and goal setting when initial performance falls short of one’s performance goal. Human Performance, 2005, 18(1), 55–80; Hollenbeck, J. R. Williams, C. R., and Klein, H. J. An empirical examination of the antecedents of commitment to goals. Journal of Applied Psychology, 1989, 74, 18–23. The expected rewards for achieving goals play an important role in the degree of goal commitment. The greater the extent to which employees believe that positive rewards (merit pay raises, bonuses, promotions, opportunities to perform interesting tasks, and the like) are contingent on achieving goals, the greater is their commitment to the goals. At Enterprise, it didn’t take long for employees to realize how the goal of 90 percent positive response to the Enterprise Service Quality Index impacted their pay. Similarly, if employees expect to be punished for not achieving goals, the probability of goal commitment also is higher. Of course, punishment and the fear of punishment as the primary means of guiding behavior may create long-term problems (see Chapter 5). Employees compare expected rewards against rewards actually received. If received rewards are consistent with expected rewards, the reward system is likely to continue to support goal commitment. If employees think that the rewards they receive are Chapter 7 Motivation: Goal Setting and Reward Programs much less than the rewards they expected, they may perceive inequity. If perceived or actual inequity exists, employees eventually reduce their goal commitment. Teamwork and peer pressure are other factors that affect a person’s commitment to a goal. The Baylor HealthTexas Provider Network has successfully matched organizational goals with those of its employees. Carl Couch and his management team set five goals, including patient care and managing costs. Why five? Because they wanted to keep managers focused on a handful of high-priority items that were measurable. At the beginning of the year, department heads sit down with their employees and communicate these five goals. They discuss how the employee plans to contribute to reaching each goal. If the manager of the emergency department needs to reduce his operating costs by 5 percent, he can log into the hospital intranet to see how costs are tracking for his department during the year. A person’s pay increase is based on individual and team performance. If a manager is not reaching her goal, then human resource managers give her input on how to achieve the goal. According to Ziad Haydar, director of quality control, “The monitoring system holds managers accountable to motivate their staffs to their highest performance.”12 Feedback Feedback makes goal setting and individual responses to goal achievement (performance) a dynamic process. Feedback provides information to the employee about how well he or she is doing. It enables the individual to relate received rewards to those expected in terms of actual performance. This comparison, in turn, can influence changes in the degree of goal commitment.13 However, some organizations are giving employees positive feedback for just showing up. Land’s End, Diamond Fiber Products, and the Scooter Store teach managers how to give positive feedback to employees using e-mails, prize packages, and public displays of appreciation. The 1,000-employee Scooter Store, for instance, has a manager who uses a power wheelchair to wheel around in while throwing confetti at employees. The manager also passes out 100 to 500 celebratory helium balloons once a week as a way of showing the company’s appreciation for employees showing up. Such positive feedback, however, rarely improves performance because it is not targeted at specific goals. Task Complexity Task complexity refers to the cognitive processing that is needed by a person to solve a task. For simple tasks (e.g., answering telephones at Marriott’s reservation center), the effort encouraged by challenging goals leads directly to high task performance. For more complex tasks (e.g., studying to achieve a high grade), effort doesn’t lead directly to effective performance. The individual must also decide where and how to allocate effort. Mediators Let’s assume that an individual has challenging goals and that the moderating factors support achievement of these goals. Mediators are links that join challenge and performance. How do the four links shown in Figure 7.2—direction, effort, persistence, and task strategy—affect performance? Direction of attention focuses behaviors on activities expected to result in goal achievement and steers the individual away from activities irrelevant to achieving the goals. At Enterprise, employees direct their attention to the two factors on the Enterprise Service Quality Index. The effort a person exerts usually depends on the difficulty of the goal. That is, the greater the challenge, the greater will be the effort expended, assuming that the person is committed to reaching the goal. Persistence involves a person’s willingness to work at the task over an extended period of time until the results are achieved. Most sports require participants to practice long and hard to hone their competencies and maintain them at a high 199 200 Part 2 The Individual in Organizations level. Finally, task strategy is the way in which an individual—often through experience and instruction—decides to tackle a task. That is, what to do first. Performance As suggested in Figure 7.2, one of the reasons why leaders and employees set goals is to achieve a level of performance that helps the entire organization achieve its goal(s). In Albuquerque, New Mexico, the Bernalillo County Parks and Recreation Department has started a program designed to create a healthy workforce. The One Step at a Time program was created to encourage employees to seek preventive medical care. This program awards points to employees who take care of themselves. The goal was to get 50 percent of its 400 employees to walk 10,000 steps a day by the end of its 12-week program. To track their performance, the department gave all employees pedometers to measure how many steps they actually took during the day. After reaching the desired performance level, employees were given water bottles, T-shirts, etc.14 Three basic types of quantitative indicators can be used to assess performance: units of production or quality (amount produced or number of errors), dollars (profits, costs, income, or sales), and time (attendance and promptness in meeting deadlines). When such measures are unavailable or inappropriate, qualitative goals (customer satisfaction, teamwork) and indicators may be used. In addition, many organizations have developed a code of ethics to support employees in setting ethical goals and making ethical decisions. Creating ethics guidelines has several advantages that the Gap, GE, and Johnson & Johnson, among others, consider important. Some of the advantages for setting ethical goals are: • to help employees identify what their organization recognizes as acceptable behaviors, • to legitimize the consideration of ethics as part of decision making, • to avoid uncertainties among employees about what is right and wrong, and • to avoid inconsistencies in decision making caused by an organizational reward system that appears to reward unethical behavior.15 Bonnie Nixon-Gardiner works at Hewlett-Packard (HP) and her goal is to improve the working conditions of employees in HP’s overseas supply factories. As described in the following Across Cultures Competency feature, she has sought to create industry-wide changes by setting the standards for her employees and influencing what other companies should do. She understands that change cannot happen in a day, week, or even a year. If she can stimulate small changes in the way HP does its business, she feels that she has made a contribution.16 Across Cultures competency Hewlett-Packard As a program manager for HP’s Supply Chain Social and Environmental Responsibility department, Bonnie Nixon-Gardiner cares about how HP treats its employees. She showed up unannounced in Long Hua, China, to inspect the working conditions at the manufacturing plant of one of HP’s largest suppliers. When the company managers tried to steer her into a conference room, she refused and asked to see the manufacturing operation that employed more than 200,000 workers. She wanted to see the waste treatment center, the dorm rooms where the workers live, and the assembly line where products are assembled. When industries such as technology suppliers and athletic gear and toy manufacturers began outsourcing manufacturing to low-wage countries, she became aware of and concerned about the sweatshop conditions that had been exposed in the media. To address those concerns, she began benchmarking how other companies monitored their suppliers. Then she set high standards for HP’s suppliers. HP now has a system of 70 auditors who inspect more than 200 factories owned by 150 of their suppliers. Nixon-Gardiner also started a training program to teach Chinese suppliers how to prevent labor and environmental abuses. This was her goal: “For consumers to know that when they touch an HP product, they are guaranteed that it was made in a socially and environmentally responsible way.” She also got Dell, IBM, Intel, and other companies to formulate the Electronic Industry Code of Conduct. This code bans abuses such as child labor, forced labor (use of prisoners), and excessive overtime. It also requires manufacturers to adhere to basic standards for environmental protection and participate in an inspection for monitoring working conditions in the plants. The inspection and enforcement of these standards are the responsibility of each manufacturer. She has been tracking performance data for several years now and can see that her efforts are paying off. After six visits to one plant, the supplier had finally addressed her concerns Motivation: Goal Setting and Reward Programs HARUYOSHI YAMAGUCHI/BLOOMBERG NEWS/LANDOV Chapter 7 Hewlett-Packard factory. one by one, which meant that the supplier had to spend lots of money to reduce employees’ exposure to dangerous equipment and harmful noise. For example, during one inspection, she found that the supplier had bought an employee some flimsy orange earplugs. Not good enough for her. The plant manager described dealing with her in this way: “Dealing with NixonGardiner is like being kissed and slapped at the same time. It can make you psychotic—but it needed to be done.” To learn more about HP, go to www.hp.com. To learn more about industry-wide standards, go to www.eicc.info. Rewards When an employee attains a high level of performance, rewards are important inducements for individuals to continue performing at that level. Rewards can be external (bonuses, paid vacations, and the like) or internal (a sense of achievement, pride in accomplishment, and feelings of success). Enterprise, PPG, and Jeff Gordon’s NASCAR organization all reward people for high performance. However, what is viewed as a reward in one culture may not be viewed as a reward in another. For example, doing business in Vietnam requires the exchange of gifts during the first day of a business meeting. Although they may be small and relatively inexpensive, gifts with a company logo are highly valued. The gifts should be wrapped, but white or black paper should not be used because these colors are associated with death. In contrast, exchanging gifts at a business meeting in the United States generally is not expected. Praising an individual in public for achievement in Vietnam will embarrass the individual. Rewards are not to be given in public. Conversely, public acclaim for achievement in the United States is valued.17 Satisfaction Many factors—including challenging work, interesting coworkers, salary, the opportunity to learn, and good working conditions—influence a person’s satisfaction with the job (see Chapter 3). However, in the goal-setting model, the primary focus is on 201 202 Part 2 The Individual in Organizations the employee’s degree of satisfaction with performance. Employees who set extremely high, difficult goals may experience less job satisfaction than employees who set lower, more easily achievable goals. Difficult goals are less frequently achieved, and satisfaction with performance is associated with success. Thus, some compromise on goal difficulty may be necessary in order to maximize both satisfaction and performance. However, some level of satisfaction is associated with simply striving for difficult goals, such as responding to a challenge, making some progress toward reaching the goals, and the belief that benefits may still be derived from the experience regardless of the outcome. Consequences The consequences of a person reaching his or her goal include both a willingness to accept future challenges and to increase his or her commitment to the organization. If a person reaches a goal, it gives the leader a way to have the person become emotionally attached to achieving even more challenging assignments. For example, one of the consequences of Martin Luther King’s “I Have a Dream” speech was that it captured the hearts of millions of people pushing for civil rights justice. For leaders, a consequence is that employees know what the goal is because their behaviors reflect the acceptance of the goals. If the outcomes of goal attainment are positive, goal commitment is likely. Learning Goal 2. State the effects of goal setting on an individual’s behavior. Effects of Goal Setting In recent years, leaders have recognized the importance of focusing their employees’ efforts to achieve high organizational performance. Because leaders are not in the position to change individuals’ personalities, they must try to motivate employees. As we have pointed out in previous chapters, a major problem for leaders is that motivation ultimately comes from within individuals and, therefore, cannot be directly observed. The best that leaders can do is create the conditions that will lead to high levels of performance. As you read about with Enterprise Rent-A-Car and Hewlett-Packard, goals lay the foundation for organizational effectiveness. Therefore, what conditions increase or decrease the benefits of goal setting? Conditions for Effective Goal Setting Five conditions must generally come together for managers to gain the benefits of a goal-setting program18: 1. The employee must have the knowledge and ability to attain the goal. If the goal is to increase sales by 15 percent within the next 12 months and the employee lacks the sales competencies needed to attain it, urging them to set “stretch goals” usually isn’t effective. It can make employees so anxious to reach the goal that they scramble to discover ways (ethical and unethical) to reach the goal, but do not learn the behaviors that are needed to be effective. 2. The employee must be committed to the goal, especially if the goal is difficult. Achieving a difficult goal requires a great deal of effort. 3. People need feedback on their progress toward the goal. Feedback enables employees to adjust their effort and behavior necessary for goal attainment. When employees discover that they are not reaching their goals, they typically increase their efforts because of the pride they have in their performance. Chapter 7 4. 5. Motivation: Goal Setting and Reward Programs Tasks that are complex need to be broken down so that the employee can set subgoals that can be attained. These subgoals yield information for employees as to whether their progress is consistent with what is required for them to attain their goal. Situational constraints can make goal attainment difficult. One of the primary roles of a manager is to ensure that employees have the resources necessary to attain their goals and to remove obstacles in the way of accomplishing those goals. Impact on Performance One of the consequences of goal setting is that it motivates individuals to achieve high performance. There are several reasons for this. First, difficult but achievable goals prompt employees to concentrate on achievement of the goals. At Enterprise Rent-A-Car, agents focus on customer satisfaction goals because they know that results are measured monthly and ranked and that these rankings affect their chances for advancement. Second, difficult goals motivate employees to spend lots of time and effort on developing methods for achieving them. At Enterprise, agents communicate with customers, sometimes at length, so that the agents understand customers’ needs and can provide the most suitable vehicle to them, whether it is a sedan, convertible, pickup, or SUV. Customer satisfaction and loyalty are vital to the success of the business. Third, difficult goals increase employees’ persistence in trying to achieve them. If employees perceive that goals can be reached by luck or with little effort, they tend to dismiss the goals as irrelevant and not follow through with the actions needed to reach them. To sum up, specific, difficult goals affect motivation and performance by: • encouraging individuals to develop action programs to reach these goals, • focusing individual’s attention on these goal-relevant actions, • causing individuals to exert the effort necessary to achieve the goals, and • spurring individuals to persist in the face of obstacles. One of the many firms that have put these principles into action is Lockheed Martin. Lockheed Martin is facing a major challenge because many of its 70,000 engineers are expected to retire within the near future. President and CEO Robert Stevens has emphasized that the company must create a workforce that is more diverse and inclusive, not only of racial and gender differences but also differences in beliefs, backgrounds, and experiences. The following Diversity Competency feature highlights how the Lockheed Martin MS2 team developed a program to achieve that goal.19 Diversity competency Lockheed Martin MS2 Team The Lockheed Martin MS2 employee communication and design team focused on an innovative “Embrace Diversity” print campaign. All 13,000 employees in the MS2 program would receive a series of postcards over four months that would encourage a discussion of various topics. The goals were (1) to engage employees’ understanding and acceptance of inclusive behavior and (2) to set the stage for greater employee involvement in both diversity communication and the company’s efforts to create a diverse, inclusive work environment. The team established two key goals: (1) to reach at least 75 percent of employees and (2) to establish a baseline of employee understanding of what constitutes a diverse environment. The team designed 12 different postcards that explored themes such as generational differences, 203 204 Part 2 The Individual in Organizations cultural and religious traditions, and military experience. The intent was to explore the beliefs and backgrounds that contribute to an inclusive work environment by presenting realistic scenarios. The design used “conversation bubbles” similar to those used in comic strips. The team decided on the postcard campaign because employees normally receive very little print material from the company. The postcard would stand out from the normal e-mail that people received. Second, with multiple postcards, the team could explore a wide variety of issues each month. Third, employees seated in nearby office or cubicles received different versions of the same theme, encouraging conversation about the theme. The team also focused on measurement and evaluation. By conducting polls of employ- ees through the intranet and discussions with employees across various locations, the team estimated that 70 percent of employees received the first set of postcards and 90 percent received the final set. They also learned that 65 percent of employees recalled that they received the postcards; 43 percent felt the diversity messages were new, different, and made them think; and 50 percent believed that the messages would cause them to change their behavior. Furthermore, more than 85 percent of employees strongly agreed that MS2 was serious about its commitment to have a diverse, inclusive work environment, and 84 percent believed that the benefits of having an inclusive work environment had been clearly communicated to them. To learn more about the program, go to www.lockheedmartin.com. Limitations to Goal Setting Goal setting has often been shown to increase performance in a variety of settings. However, there are three potential limitations.20 First, when employees lack the skills and abilities needed to perform at a high level, goal setting doesn’t work. Giving an employee a goal of writing a computer program will not lead to high performance if the worker doesn’t know how to write such a program. To overcome this limitation, new hires at the Ritz-Carlton, for example, are required to attend training sessions at which they are taught how to process requests and complaints, build customer loyalty, and establish relationships with restaurants, taxi services, golf courses, and others services frequently requested by guests. Second, successful goal setting takes longer when employees are given complicated tasks that require a considerable amount of learning. Good performance on complicated tasks also requires that employees be able to direct all of their attention to the tasks and not be interrupted by side issues. Steve Letarte’s Rainbow Warriors pit crew is able to perform complicated tasks quickly because they are the only tasks that the crew is focusing on while the car is in the pit. Third, goal setting can lead to major problems when it rewards the wrong behaviors. Rod Rodin is the CEO of Marshall Industries, a billion-dollar electronics distributor in Los Angeles that serves more than 30,000 customers who order more than 700,000 parts a month. He quickly recognized that the company’s reward program was encouraging behaviors that led to poor service, dissatisfied customers, and, ultimately, Change Insight lower profits. Rodin found that more than 20 percent of each Why should I pay you to get in the batter’s month’s sales were shipped to clients during the last three days box? When you hit the ball, I’ll increase of the month. Managers were hiding customer returns or openyour pay. Results are paid for; showing up ing bad credit accounts just to make their monthly sales goals. doesn’t count for much. Divisions were hiding products from each other or saying that Carlos Sepulveda, CEO, Interstate Battery products had been shipped when they really had none on hand. Salespeople fought over how to split commissions on revenue from a customer who did design work in Chicago but made Chapter 7 Motivation: Goal Setting and Reward Programs 205 purchases in Cleveland. Employee and team performance were reviewed and ranked on the basis of numerical criteria, such as receivables outstanding and gross sales dollars. Rodin’s solution was to scrap the incentive compensation program. He declared that there would be no more contests, prizes, or bonuses for individual achievements. Everyone at Marshall was put on a salary and shared in a company-wide bonus pool if the organization as a whole met its goals. It worked.21 Insights for Leaders As you might expect, individuals who are both satisfied with and committed to an organization are more likely to stay with and accept the challenges the organization presents. Turnover and absenteeism rates for satisfied individuals are lower. This link brings us full circle to the beginning of the goal-setting model. What might happen if things go badly and an individual who had been satisfied becomes dissatisfied? Individual responses fall into at least six categories: (1) job avoidance (quitting), (2) work avoidance (absenteeism, arriving late, and leaving early), (3) psychological defenses (alcohol and/or drug abuse), (4) constructive protest (complaining), (5) defiance (refusing to do what is asked), and (6) aggression (theft or assault). Quitting is the most common outcome of severe dissatisfaction.22 The goal-setting model has important implications for employees, leaders, and teams alike. First, it provides an excellent framework to assist the leader or team in diagnosing the potential problems with low- or average-performing employees. Diagnostic questions might include these: (1) How were the goals set? (2) Are the goals challenging? (3) What is affecting goal commitment? and (4) Does the employee know when he has done a good job? Second, it provides concrete advice to the leader on how to create a high-performance work environment. Third, it portrays the relationships and interplay among key factors, such as goal difficulty, goal commitment, feedback, and rewards, to achieve high performance. Reward Programs for Improving Performance In Chapters 5 and 6, we discussed types of rewards that organizations make available to employees. From the concepts discussed in those chapters, along with the concepts presented so far in this chapter, you should by now recognize that one of the basic goals of leaders should be to motivate employees to perform at their highest levels. Managers agree that tying rewards to job performance is essential. However, the actual implementation of programs designed to bring about such a relationship is often quite difficult. Questions that arise include “Should rewards be tied to the performance of an individual or team?” Recall that Rod Rodin, CEO of Marshall Industries, found that rewarding individual performance only created unhealthy competition among employees and destroyed morale. Deciding to reward all employees in the organization raises another question: Should the rewards be based on cost savings or profits and be distributed annually or when employees retire or otherwise leave the organization? Considerable research has been done on how rewards affect individual and team performance. According to the Ascent Consulting organization, the ability of rewards to motivate individuals or teams to high performance was found to depend on six factors23: 1. Availability. For rewards to reinforce desired performance, they must be available. Too little of a desired reward is no reward at all. For example, pay increases are often highly desired but unavailable. Moreover, pay increases that are below minimally accepted standards may actually produce negative consequences, including theft, falsifying records, and the like. Organizations spend an average of $850 Learning Goal 3. Describe reward programs for improving performance. 206 Part 2 The Individual in Organizations per employee on reward and recognition programs, but there are wide variations. Fifty percent of organizations spend less than $100 per year per employee, 65 percent spend less than $500, and 10 percent spend more than $2,500 per employee annually. 2. Timeliness. Like performance feedback, rewards should be given in a timely manner. A reward’s motivating potential is reduced to the extent that it is separated in time from the performance it is intended to reinforce. Most companies use a combination of on-the-spot awards and team/departmental performance. On-thespot rewards are usually in the form of gift cards, dress casual days, time-off, and the like. 3. Performance contingency. Rewards should be closely linked with particular performances. If a goal is met, the reward is given. The clearer the link between goal achievement and rewards, the better able rewards are to motivate desired behavior. Forty percent of employees nationwide believe that there is no link between their performance and rewards, such as bonuses and pay. 4. Durability. Some rewards last longer than others. Intrinsic rewards, such as increased autonomy, challenge, and accountability, tend to last longer than extrinsic rewards, such as a gift card to a restaurant. 5. Equity. Employees’ motivation to perform is improved when they believe that the reward policies of their organization are fair and equitable. 6. Visibility. To promote a reward program, leaders must ensure that rewards are visible throughout an organization. Visible rewards, such as assignments to important committees or promotion to a new job, send signals to employees that rewards are available, timely, and based on performance. Many weight-loss programs, such as Jenny Craig and Diet Center, use these factors when helping clients lose weight. In One Small Step Can Change Your Life, author Robert Maurer challenges participants to “march in place for one minute while watching television.” One minute of low-intensity exercise then becomes stretched to two, three, four, etc. As the participant sees his or her weight drop, other stretch goals can be set. As the participant’s weight drops, tote bags, T-shirts, and other rewards are given to celebrate pounds and inches lost.24 To the extent that reward programs are used to motivate employees to achieve higher performance, we discuss four popular ones: informal, profit-sharing, skillbased pay, and flexible benefit programs. The strengths and limitations of each are summarized in Table 7.3. TABLE 7. 3 Reward Programs for Improving Performance REWARD PROGRAMS STRENGTHS LIMITATIONS Informal reward programs Cost effective; flexible; timely; easy to use. Profit-sharing programs Reward organizational performance. Skill-based pay programs Reward employees with higher pay for learning new skills. Flexible benefit programs Tailored to fit individual employee needs. Often ignored by leaders as trivial; not given for specific performance. Individuals and teams are not likely to have an impact on overall performance. Labor costs increase as employees’ skills increase; employees can “top out” at the highest skill level. Not directly linked to performance; difficult to use with teams. Chapter 7 Motivation: Goal Setting and Reward Programs Informal Programs Leaders have long underestimated the importance of informal rewards for improving individuals’ performance.25 At a time when raises and promotions are scarce, the use of informal rewards by leaders is gaining in popularity. In a recent survey, 81 percent of employees say that they do not receive any reward for increased productivity, and 60 percent indicate that their compensation will not increase if their performance improves. Informal rewards refer to those that result from interactions between people. Informal rewards are designed to encourage continuous improvement. For years, one of your authors has written a personal note to all students who received an A in his class and mailed these to the students’ homes. The personal note thanks the students for their hard work and dedication to the course and adds some personal statements. Many students show these notes to their fellow students and parents and keep them for years. Sherry Burnside showed up in the office after graduating 15 years earlier and said that she still remembers getting the note—in fact, she still has it—and the impact that it had on her. Now a successful leader of research programs at Presbyterian Hospital, she uses the same practice with her employees—thanking them for a job well done. Note that informal rewards are personal and flexible, easy to use, and cost effective. Characteristics of Informal Rewards What makes informal rewards effective? Informal rewards are most effective when they: • directly reinforce the desired behavior, • are given immediately, • are delivered personally, and • are valued by the individual. At Blanchard Training and Development in San Diego, California, leaders have established the Eagle Award to recognize legendary service to customers—one of the organization’s goal. The program was announced and explained at a companywide meeting. The program is open to any employee who could submit the name of another employee who had gone out of his or her way to satisfy a customer request. The name is submitted with a brief description of the activity, such as staying late to ship materials, helping a customer find a lost order, resolving a billing problem, etc. The recognized employee is surprised by a visit from the Eagle Committee. The employee’s picture is taken holding the award and the photo displayed on the bulletin board in the company’s lobby with a brief description of the activity that is being recognized. The recipient keeps the eagle statue on his or her desk until it is needed for the next recipient. At the end of the year, by a vote of prior Eagle Award winners, one person is awarded an engraved clock at the company’s celebration program.26 Profit-Sharing Programs Profit-sharing programs provide employees with a portion of the company’s earnings. As the name suggests, profit-sharing programs distribute profits to employees. Average profit-sharing figures are difficult to calculate. According to some experts, they typically range between 4 and 6 percent of a person’s salary. Steve Watson, managing director at Stanton Chase, an executive-recruiting firm, contends that profit sharing may have a limited impact because employees may feel that they can do little to influence the organization’s overall profitability. That is, company profits are influenced by many factors (e.g., competitor’s products, state of the economy, and inflation rate) that are well beyond the employees’ control. However, profit-sharing programs are very popular in Japan. For example, at Seiko Instruments many managers and workers receive bonuses twice a year that equal four or five months’ salary. These bonuses are based on the company’s overall performance.27 207 208 Part 2 The Individual in Organizations What are the characteristics of successful profit-sharing programs? According to John Semyan, partner at TNS Associates, an executive-recruiting firm, more than one-third of the companies that use profit sharing do not track the results of such programs. In addition, 28 percent indicate that their profit-sharing programs do not meet their goals. To reduce failure, the following recommendations are offered: • Involve line managers and employees in the program’s creation to ensure their support. • Set clear goals for the program. • Ensure that the employees understand the metrics that the program is measuring. • Tie the program to the company’s strategies. • Give the program time to succeed. It takes two or three years for a program to change overall company performance. • Provide up-to-date information that allows employees to see how well they are performing against their goals.28 The following Change Competency feature illustrates how Nucor uses its profitsharing plan to reward employees. When Nucor entered the steel-making business in1986 as a mini-mill, it was an upstart company in a business dominated by large producers, such as Bethlehem Steel, U.S. Steel, and National Steel. Faced with a successful challenge from China and other steel-producing nations, many of the steel mills in the United States have been closed. Nucor, however, survived. Today, Nucor is among the largest steel companies in the world, employing more than 18,000 and with sales exceeding $16 billion annually. Until the latest recession, Nucor’s sales had been growing at more than 12 percent a year. With such growth, Nucor has not laid off any employees since it started production in 1986. One of the reasons for its success is found in its profit-sharing plan.29 Change competency Nucor’s Profit-Sharing Program Nucor has developed a profit-sharing plan that works and is easy to understand. The average Nucor steelworker earns more than $70,000 per year, but only one-third of that amount is guaranteed. Jim Coblin, human resources vice president, believes that paying a low base salary, but paying high bonuses on a weekly basis, will keep employees focused on Nucor’s goals of quality and customer satisfaction. The bonuses are paid based on the quality and tons produced and shipped by a team. The average base pay is between $9 and $10 an hour, but with the bonuses employees can make an additional $15 to $20 an hour. Nucor’s profit-sharing plan also has some penalties. If employees catch a bad load of steel before it is shipped, they lose their bonus for that shipment. If that bad batch To learn more about Nucor, go to www.nucor.com. is shipped to a customer, the team loses three times its usual bonus. Nucor’s profit-sharing plan is also based on employees’ ability to keep the mills running and discover new ways to improve the quality and amount of steel produced. For example, when the electrical grid that feeds its Hickman, Arkansas, plant failed, it could have shut down that plant for one week. When three electricians from other plants heard the news, they drove to Hickman and within three days got the business operating. Dan DiMicco, Nucor’s CEO, praised them for their efforts and thanked them for giving up their weekend, but these three electricians earned no extra pay for their actions. These three electricians did what they had to do to make Nucor successful. Chapter 7 Motivation: Goal Setting and Reward Programs Skill-Based Pay Programs Paying employees according to their value in the labor market makes a great deal of sense. After all, employees with highly developed skills and those who develop multiple skills are particularly valuable assets to the organization. As we emphasized earlier, the communication, team, and change competencies are often based on mastering a number of specific skills. Skill-based pay programs are based on the number and level of job-related skills that an employee has learned.30 Skill-based pay compensates employees for the skills they can use in the organization, rather than for the specific jobs they are performing. Pay changes do not necessarily go along with job changes. There is also little emphasis on seniority. The underlying assumption is that by focusing on the individual rather than the job, skill-based reward programs recognize learning and growth. Employees are paid according to the number of different skills they can perform. More than 16 percent of the Fortune 1000 companies use skill-based pay programs to motivate employees. In the United Kingdom, the Norwich and Peterborough Building Society, a mortgage and banking business, had a 12-level reward program. It proved to be ineffective in curbing turnover, covered only some of the employees, and basically confused employees. The new program centers on a 5-level job skills reward program, such as customer service and relationship management, that are linked to pay rate changes in the market. Sixty-seven percent of employees now know that their pay progression is linked to the attainment of these 5-level job skills. As a result, employee turnover dropped to 17 percent from 25 percent, productivity increased, and customer satisfaction improved. Employees report that the new pay system is simple, transparent, and they understand what skills they need to learn to increase their pay. And managers do not have to answer the question “Why is that person earning more than I am?”31 Of course, skill-based pay programs have some limitations.32 One major drawback of skill-based pay is the tendency to “top out.” Topping-out occurs when employees learn all the skills there are to master and, hence, reach the top end of the pay scale, with no higher levels to attain. Some organizations, such as GE and United Technologies, have resolved the topping-out effect by installing a gain-sharing program after most employees have learned all of the required skills. Other organizations have resolved this limitation by making skills obsolete, eliminating them, and adding new ones, thus raising the standards of employee competence. Other limitations include inadequate management commitment to the program, conflicts between the employees included in and those excluded from the skill-based pay program, inadequate training of managers, and poor program designs that increase labor costs without providing offsetting organizational benefits. Skill-based pay programs also require a heavy investment in training, as well as measurement systems capable of assessing when employees have learned the new skills. Flexible Benefit Programs Flexible benefit programs allow employees to choose the benefits they want, rather than having management choose for them. Flexible benefit programs often are called cafeteria-style benefit programs. According to Leslie Ritter, a principal in Sagen Consulting, a human resource consulting firm located in Addison, Texas, a typical corporation’s benefits program costs between 25 and 30 percent of its total employee compensation package.33 This represents a huge cost, considering that only 3 percent or less is set aside annually for merit pay increases in most organizations. Under flexible benefit programs, employees decide—beyond a base program—which additional benefits they want, tailoring the benefits package to their needs. The idea is that employees can make important and intelligent decisions about their benefits. Some employees take all of their discretionary benefits in cash; others choose additional life insurance, child or elder care, dental 209 Part 2 The Individual in Organizations CULTURA/ALAMY 210 ▲ In flexible benefit programs, employees choose the benefits they want. insurance, or retirement programs. Extensive benefit options may be highly attractive to an employee with a family. However, many benefits might be only minimally attractive to a young, single employee. Older employees value retirement programs more than younger employees and are willing to put more money into them. Employees with elderly parents may desire financial assistance in providing care for them. At Travelers Insurance Company, employees can choose benefits of up to $5,000 a year for the care of dependent elderly parents. Thousands of organizations now offer flexible benefit programs. They are very popular because they offer three distinct advantages. First, they allow employees to make important decisions about their finances and to match their needs with their benefit programs. Second, such programs help organizations control their costs, especially for health care. Employers can set the maximum amount of benefit dollars they will spend on employees’ benefits and avoid automatically absorbing cost increases. Third, such programs highlight the economic value of many benefits to employees. Most employees have little idea of the cost of benefits because the organization is willing to pay for them even though employees might not want some of them or might prefer alternatives. Some limitations are associated with flexible benefit programs. First, because different employees choose different benefit packages, record keeping becomes more complicated. Sophisticated computer systems are essential for tracking the details of employees’ records. Second, it is difficult to accurately predict the number of employees that might choose each benefit. Such uncertainty may affect the firm’s group rates for life and medical insurance, because the costs of such programs are based on the number of employees covered. Insights for Leaders Improving performance-based reward systems has come under attack, especially during the recent recession. CEOs at JPMorgan Chase, AT&T, and Citigroup, among others, have been in the news for granting huge bonuses to key employees when their firms are experiencing major financial losses. Comcast has designed a reward system that will pay its CEO, Brian Roberts, a $47.5 million bonus if he dies on the job. Disney has even promised to keep paying CEO Robert Iger’s salary to his heirs for three years after he dies! Such arrangements have stockholders and others shaking their heads and demanding to know how the company dare pay people who are dead and not performing.34 While the compensation committees of these companies defend these deals as a kind of life insurance to maintain talent, President Obama and members of Congress have called for “anti-greed” proposals to stop such practices. Although these instances are small in number, the magnitude of these rewards is what people are disturbed about. Let’s look at some of the more important practices to improve effectiveness, as shown in Figure 7.3. First, leaders need to link rewards to performance and set a measurement system in place that measures the behaviors that lead to effectiveness. In Chapter 5, we discussed how principles of reinforcement theory can be used to channel and reward employees’ behaviors. In Chapter 6, we discussed how expectancy theory concepts can be used to reward proper behavior. The foundation for the recommendations using either concept is that good performers should be rewarded more than poor performers. Leaders can improve the performance–reward linkage by using objective measures of performance along with subjective ones, such as leadership, teamwork, and communications. Objectives measures, such as volume, customer complaints, and machine downtime, need to be established and agreed Chapter 7 Motivation: Goal Setting and Reward Programs 211 FIGURE 7. 3 Deciding among Alternative Reward Programs 1. 2. 3. 4. 5. Are there accurate indicators of individual performance? Is the performance of one person independent of others? Are individual performance goals constant? Is the firm unionized? Is pay secrecy important? Team-based Programs 1. Is the cost accounting system sophisticated? 2. Are employees accustomed to participating in decision making? 3. Will employees accept deferred payments? Individual-based Programs 1. Can managers measure performance objectively? 2. Is employee turnover high? 3. Is there a consensus on work goals? • Profit-sharing programs • Skill-based pay • Flexible benefit plans • Informal reward programs Source: Adapted from Wagner, J. A., and Hollenbeck, J. K. Organizational Behavior, 3rd ed. Englewood Cliffs, NJ: Simon & Schuster, 1998, 100. on by individuals. Both subjective and objective measures need to be related to the organization’s goals. Organizations also need to reward individuals soon after the performance occurs and with a sufficient size reward so that individuals experience positive emotions when receiving the rewards. This is one of the reasons why Nucor’s profit-sharing program has been so successful—workers receive bonuses on a weekly basis. Second, leaders need to make sure that rewards are relevant and valued by employees. Employees need to see a connection between their daily actions and a reward to be motivated to improve their performance. At Whole Foods Market, each department within the store is run by a team with a monthly payroll budget. If payroll money is unspent at the end of a month, the surplus is divided among the members of that Whole Foods team. Leaders should ask employees what they value. According to Dave Stoner, CEO of ViewCast, employees don’t always go for material things. They want rewards that have value for them. For example, for years, on the Monday before Thanksgiving, leaders at ViewCast gave turkeys or hams to employees who worked in the shipping department. But when asked, most of the employees said that they valued only working a half day on Wednesday, instead of receiving a turkey or ham, so they could travel to be with their families. They promised that all of their work would be done prior to noon on Wednesday even if they had to show up early to achieve the result. Lastly, leaders need to watch out for unintended consequences. Performancebased reward systems sometimes have undesirable effects on behavior. For example 212 Part 2 The Individual in Organizations when Domino’s pizza started it advertising campaign “Fifteen minutes or it’s free,” the program delivered more hot pizzas to customers. However, it also increased the number of accidents its drivers were involved in because the program unintentionally rewarded drivers for making the delivery within 15 minutes. To make this deadline, many drivers had to speed. Reward Practices in Different Cultures Organizations in various countries utilize different reward programs. Cultural values learned in childhood are passed down from one generation to the next and serve to differentiate one country from another. In Chapter 3, we presented a framework for examining various feelings, ideas, values, and ways of thinking that differentiate people of one culture from another.35 We discussed the five dimensions on which cultures can vary: power distance, individualism–collectivism, gender role orientation, uncertainty avoidance, and long-term orientation. Please reread pages 72–75 to refresh yourself with these dimensions and then take a look at the information shown in Table 7.4, which was taken from several large international studies that examined reward program differences in more than 50 cultures. Using what you’ve learned about the cultural dimensions and Table 7.4, let’s explore how four of these five dimensions impact differences in reward programs.36 In high power distance cultures, rewards are based on one’s level within the managerial hierarchy. There are wide salary ranges between the top and lower level employees. Perquisites and status symbols are popular and expected. Profit sharing and other forms of variable compensation systems are relied on to motivate employees. Subordinates are motivated by the threat of sanctions. In individualistic cultures, organizations expect individuals to look out for their own personal interests. The employee–employer compensation relationship is a business deal based on what the “labor market” will pay. Incentives are given to individuals. Therefore, skill-based programs and MBO programs are popular because they reward an individual’s achievements. In collective cultures, team-based pay is used to reinforce the team or group’s achievements. At NSK, a ball-bearing manufacturer, and Toto, a toilet producer, when business slows down, these Japanese companies permit all workers to work shorter shifts and receive smaller paychecks. TABLE 7.4 Cultures and Reward Systems CULTURE REWARD SYSTEM Power distance Pay based on individual performance Status symbols are important Pay tied to level in the organization’s hierarchy Stock options to MBO Pay based on team performance Profit sharing Little emphasis on extrinsic rewards Extensive use of fringe benefits Gain sharing Goals set by participation linked to team achievements Pay equality Pay focuses on long-term orientation Seniority is important Individualism-collectivism Gender role orientation Uncertainty avoidance Source: Adapted from Tosi, J. L., and Greckhamer, T. Culture & CEO compensation. Organization Science, 2004, 15, 657–670; and Hofstede, G. Cultures Consequences, 2nd ed. Thousand Oaks, CA: Sage, 2001. Chapter 7 Motivation: Goal Setting and Reward Programs 213 In cultures that do not have a strong gender role orientation, equality among members is stressed. There are fewer differences in pay based on gender differences. Flexible benefit programs that allow the individual a wide choice of non–work-related benefits (e.g., child care, sabbatical leaves) are used to motivate employees to perform. For example, in Sweden, women in management take having families for granted and expect managers to find creative ways to help them work through this childbearing time. In high uncertainty avoidance cultures, reward programs emphasize seniority. There is strong loyalty to the company that leads to long-term employment. Rewards based on seniority are easy to administer and understand. These programs expose the employee to little risk because they are based on the performance of the company and not on individual and/or team efforts. There is high fear of failure. In Japan and other Asian cultures, employees receive their annual pay raise on their anniversary date (the day they joined the company). Instead of dismissing an employee for poor performance, managers move people from one department to another or into a “window seat,” a job with little authority and responsibility. These practices allow the employee to save face. Chapter Summary Goal setting is a process intended to increase efficiency and effectiveness by specifying the desired outcomes toward which employees, departments, teams, and organizations should work. The goal-setting model emphasizes the challenges provided for the individual: goal difficulty, goal clarity, and self-efficacy. Setting difficult but clear and achievable goals for individuals who believe that they have the ability to complete their tasks leads to high performance. Four moderators—ability, goal commitment, feedback, and task complexity—influence the strength of the relationship between challenging goals and performance. If the individual has the ability, is committed to the goal, and is given feedback on progress toward achievement of the goal—and if the task is complex—high performance will result. All four moderators must be present to motivate an employee to achieve goals. Four mediators—direction, effort, persistence, and task strategy—facilitate goal attainment. These four characteristics channel or focus the employee’s motivational efforts. Performance, rewards, satisfaction, and consequences complete the model. 1. Explain how goal setting Goal setting is a key mechanism for increasing job satisfaction and performance because it permits employees to be self-motivated. Five requirements must be in place for goal setting to have positive benefits for the employee and organization: the employee’s knowledge and ability, the employee’s commitment to a goal, feedback on the task, establishment of subgoals on complex tasks, and a leader who removes obstacles that prevent employees from reaching their goals. 2. State the effects of goal Reward programs represent a powerful means for motivating high levels of individual and team performance. Reward programs, in particular, are designed to enhance performance: informal rewards, profit sharing, skilled-based pay, and flexible benefits. Informal rewards come about through interactions with others—coworkers, superiors, and customers. Profit sharing gives employees a portion of the department’s or organization’s profits. Skilled-based pay programs compensate an employee according to the number and level of job-related skills they have mastered. The value of these skills is determined by the organization. Flexible benefit programs allow employees to choose the benefits that are important to them. 3. Describe reward affects performance. setting on an individual’s behavior. programs for improving performance. 214 Part 2 The Individual in Organizations Key Terms and Concepts Cafeteria-style benefit programs, 209 Feedback, 199 Flexible benefit programs, 209 Goal clarity, 195 Goal commitment, 197 Goal difficulty, 195 Goal setting, 192 Goals, 192 Informal rewards, 207 Management by objectives (MBO), 195 Profit-sharing programs, 207 Skill-based pay programs, 209 Task complexity, 199 Discussion Questions 1. 2. 3. 4. 5. Visit Enterprise at www.enterprise.com. Click on “Careers,” on “Our Culture,” then on “Our Values.” How does Enterprise use goal-setting? What are some ethical problems associated with performance-based reward programs? What abuses have you seen? How can leaders correct such abuses? What factors influenced your level of goal commitment to this course? Did your level of commitment change after receiving feedback on an assignment or test? Explain. Use the goal-setting model found on page 194 to analyze Steve Letarte’s NASCAR team, the Rainbow Warriors. Why is the team effective? Sandra Swann, director of human resources at ViewCast, said that many times, leaders commit the error of measuring the wrong behaviors with excruciating accuracy. What implications does this pose for leaders using management by objectives? 6. Jay Beck, general manager at Benefit Partners, a company that specializes in human resource management, said: “If you cannot define it and measure it, you are not going to get it.” What implications does this statement have for setting goals? For measuring them? 7. What are some of the negative issues associated with goal-setting programs? 8. Why does the diversity program at Lockheed Martin work? 9. What are some problems that employees might face in an organization that has adopted a skill-based pay program? 10. Bella Goren, vice president for Customer Services Planning in Asia for American Airlines, is transferring a manager from American Airlines based in Dallas to Japan. What cultural issues might he encounter when rewarding employees in Japan? Experiential Exercise and Case Experiential Exercise: Self Competency37 Goal Setting Instructions _____ 5. The following statements refer to a job you currently hold or have held. Read each statement and then select a response from the following scale that best describes your view. You may want to use a separate sheet of paper to record your responses and compare them with the responses of others. Scale Almost Never 1 2 _____ 1. _____ 2. _____ 3. _____ 4. 3 Almost Always 4 5 I understand exactly what I am supposed to do on my job. I have specific, clear goals to aim for on my job. The goals I have on this job are challenging. I understand how my performance is measured on this job. I have deadlines for accomplishing my goals on this job. _____ 6. If I have more than one goal to accomplish, I know which are most important and which are least important. _____ 7. My goals require my full effort. _____ 8. My manager tells me the reasons for giving me the goals I have. _____ 9. My manager is supportive with respect to encouraging me to reach my goals. _____ 10. My manager lets me participate in the setting of my goals. _____ 11. My manager lets me have some say in deciding how I will go about implementing my goals. _____ 12. If I reach my goals, I know that my manager will be pleased. Chapter 7 Motivation: Goal Setting and Reward Programs _____ 13. I get credit and recognition when I attain my goals. _____ 14. Trying for goals makes my job more fun than it would be without goals. _____ 15. I feel proud when I get feedback indicating that I have reached my goals. _____ 16. The other people I work with encourage me to attain my goals. _____ 17. I sometimes compete with my coworkers to see who can do the best job in reaching our goals. _____ 18. If I reach my goals, my job security will be improved. _____ 19. If I reach my goals, my chances for a pay raise are increased. _____ 20. If I reach my goals, my chances for a promotion are increased. _____ 21. I usually feel that I have a suitable action program(s) for reaching my goals. _____ 22. I get regular feedback indicating how I am performing in relation to my goals. _____ 23. I feel that my training was good enough so that I am capable of reaching my goals. _____ 24. Organization policies help rather than hurt goal attainment. _____ 25. Teams work together in this company to attain goals. _____ 26. This organization provides sufficient resources (e.g., time, money, and equipment) to make goal setting effective. 215 _____ 27. In performance appraisal sessions, my supervisor stresses problem solving rather than criticism. _____ 28. Goals in this organization are used more to help you do your job well rather than punish you. _____ 29. The pressure to achieve goals here fosters honesty as opposed to cheating and dishonesty. _____ 30. If my manager makes a mistake that affects my ability to attain my goals, he or she admits it. Scoring and Interpretation Add the points shown for items 1 through 30. Scores of 120 to 150 may indicate a high-performing, highly satisfying work situation. Your goals are challenging and you are committed to reaching them. When you achieve your goals, you are rewarded for your accomplishments. Scores of 80 to 119 may suggest a highly varied work situation with some motivating and satisfying features and some frustrating and dissatisfying features. Scores of 30 to 79 may suggest a low-performing, dissatisfying work situation. Questions 1. Using the concepts found in the goal-setting model, how might you increase your performance? 2. Why don’t employees use goal-setting concepts in their everyday life to control their weight and personal habits? Case: Diversity Competency Allstate Insurance Company38 In today’s competitive environment, companies continue to look for ways to improve their performance and achieve corporate goals. The task is not easy, but the team of human resource (HR) executives at Allstate Corporation has found that its diversity strategy has become one of the company’s most important competitive weapons. It has long been Allstate’s position that diversity is about neither political mandates nor legal obligation. Rather, the company’s vision is stated this way: “Diversity is Allstate’s strategy for leveraging differences in order to create a competitive advantage.” This strategy has two major points: one internally focused and the other externally focused. According to James DeVries, senior vice president of human resources, the internal diversity focus is about “unlocking the potential for excellence in all workers by providing them the tools, resources, and opportunities to succeed.” The external focus of diversity is about making certain that the workforce matches the experiences, backgrounds, and sensitivities of the markets it serves. In this context, Allstate managers view diversity not as a goal but as a process that is integrated into the daily life of the company. Allstate launched its first affirmative action program back in 1969. In the early days, its commitment to diversity didn’t always link recruitment, development, and retention strategies to business performance. The company focused more on affirmative action and diversity awareness through education and training. Although these initiatives were considered innovative in their day, they were not linked to Allstate’s business strategy. The director of diversity management notes that the key question has become “How do you take this workforce of differences and bring them together in a more powerful way so that it can impact business results?” Allstate has taken four specific steps: Step One: Succession Programming. A diverse slate of candidates is identified and developed for each key position. Allstate’s management information system enables it to track and measure key drivers of career development and career opportunities for all of its more than 36,000 employees, ensuring that the company’s future workforce will be diverse at all levels. Allstate’s succession programming has made a difference that is easy to measure. Employment of women and minorities has grown at a rate far surpassing national averages. Today, 50 percent of Allstate’s more than 5,300 executives and managers are women, and of that percentage, 25 percent are Hispanics or people of color. Languages other than English, a total of 62, are spoken in more than 3,200 Allstate agencies. The company 216 Part 2 The Individual in Organizations has a minority recruitment program that focuses on colleges and universities with the most diverse enrollments. Step Two: Development. Through the company’s employee development process, all employees receive an assessment of their current job skills and a road map for developing the critical skills necessary for advancement. Options include education, coaching and mentoring, and classroom training. Leaders are provided employee feedback on which they can base future development programs. In addition, all of Allstate’s nonagent employees with service of more than one year have completed mandatory diversity training courses. Step Three: Measurement. Twice a year the company takes a snapshot of all 36,000 employees through a survey called the Diversity Index. As a part of a larger online employee survey and feedback process called the Quarterly Leadership Measurement System (QLMS), the Diversity Index asks the following questions: 1. To what extent does our company deliver quality service to customers regardless of their ethnic background, gender, age, and so on? 2. To what extent are you treated with respect and dignity at work? To what extent does your immediate manager/ team leader seek out and utilize the different backgrounds and perspectives of all employees in your work group? 3. How often do you observe insensitive behavior at work, for example, inappropriate comments or jokes about ethnic background, gender, age, and so on? 4. To what extent do you work in an environment of trust where employees/agents are free to offer different opinions? Management communicates the results of this survey via its intranet and actively solicits feedback from employees on creating action programs to solve problems and improve work processes. Step Four: Accountability and Reward. To link compensation to the company’s diversity goals, 25 percent of each manager’s merit pay is based on the Diversity Index and the QLMS. DeVries believes that this sharpens the focus on the initiative. “What you measure is what people focus on. This really sends a clear signal that management of people and doing that well are really important.” To help employees maintain a balance between work and personal life, Allstate has a number of programs in place. For example, it has an on-site child-care center at its headquarters in Northbrook, Illinois, and three near-site child-care centers, all of which offer parents discount programs. It also has on-site dry cleaning, oil change, and postal and catering services and allows for flexible work arrangements for its employees. The Allstate Center for Assistive Technology (ACAT) helps employees with disabilities that include carpal tunnel syndrome, mobility impairments, and multiple sclerosis. For example, when one information technology employee began experiencing hearing problems, the ACAT team was deployed to fit him with a special home phone for use when he was on night call. Questions 1. Using the model found on page 194, evaluate Allstate’s goal-setting process. How does it work? 2. On pages 202–203, we list some of the dimensions of an effective goal-setting program. Does Allstate meet these criteria? 3. What type of high-performance reward system should Allstate choose to motivate its employees to reach its diversity goals? chapter 8 Workplace Stress and Aggression Learning Goals Learning Content After studying this chapter, you should be able to: Learning from Experience Stress and Coping with a Layoff 1 Concept of Stress Explain the concept of and influences on creating stress. Primary Stressors 2 Identify the primary sources of work-related stressors. 3 State the potential impacts of severe stress on health, performance, and job burnout. 4 Describe how individual differences influence reactions to stressful situations. 5 Apply individual and leader insights to the management of workplace stress. 6 Explain four major types of workplace aggression. Communication Competency Workplace Incivility: How Not to Communicate Severe Stress Individual Differences and Stress Self Competency Chesley B. Sullenberger III, Captain of US Airways Flight 1549 Stress Management Change Competency Ortho-Clinical Diagnostics’ Wellness Program Workplace Aggression Diversity Competency Darwin Realty Experiential Exercise and Case Experiential Exercise: Self Competency Work-Related Stress Inventory Case: Ethics Competency Coleen Colombo and Colleagues Resist Mortgage Fraud Learning from Experience Stress and Coping with a Layoff DAVID MUSCROFT/PHOTOLIBRARY Job layoffs in the recent recession showed no mercy. They struck all levels of organizations: from data entry clerks to department managers, from new hires to senior employees. This opening feature provides brief examples of the stresses and coping efforts of five employees and their families as a result of layoffs. Charlene Jeter was laid off as vice president of marketing at SunTrust MidAtlantic, a financial institution, during a restructuring. Her 28 years there entitled her to a good severance package. She’s still looking for a job after a full year. She states: “Employers can be very picky right now. There are too many people like me out there.” She thought her diverse marketing skills would transfer easily, but she has found that employers want specialists. She has applied for 58 jobs and had 10 in-person interviews, but nothing has clicked yet. Adding to the stress, her husband, Duane, was laid off from his job in the construction industry. She states: “He has the kind of skills that he can hire himself out hourly, if not full time, almost more easily than I can. In his world, it seems people need him to do things but can’t hire him full time.” With neither of them working full time, they’ve cut back in little ways. For Christmas, they didn’t buy big presents. They don’t eat out often. They pay more attention to prices. She feels fortunate they only have themselves to worry about. Charlene adds: “I know people that this happened to and they’re sweating kids or college. That kind of burden we don’t have.” To learn more about stress, go to www.stress.org. Life changed for Thomas and Jennifer Dodson of Sacramento, California, when he was laid off by the architecture firm where he worked. He immediately started his own consulting firm. Although the work is rewarding and fulfilling, it continues to be an “immense struggle financially,” he says. He praises his wife for being “more than great” throughout this experience. He states: “She has been a rock. Despite the stress and turmoil this has brought into our life, this has made us closer than ever. I don’t know how people do it without the support of their spouse. Having that other person there whispering in your ear and telling you you can do it is so powerful.” Joyce Ellis was phased out of an accounting position at a construction company. She’s searching for another job but doesn’t expect quick results. “I’ve been on the other side, so I understand what it’s like to hire someone,” she said. As 220 Part 2 The Individual in Organizations one of 10 children, she learned to be frugal and that knowledge has come in handy now and when she was laid off from another job about seven years ago. She has always planned her expenses so she will be okay financially as she searches for another job. For instance, when she purchased her house, she bought the house she could afford, rather than a bigger or fancier house. Joyce said, “That’s all preplanning, not getting in over your head when the mortgage company says you can afford much more.” To save on heating in her home, she keeps the thermostat low and wears layers of clothing. She hangs double-layer curtains to block cold air. Her two children are grown, so she only has herself to take care of. Stacy Shiplett of Akron, Ohio, knows all too well the ill effects of financial stress. The mother of two has been looking for a job for months since she lost hers. She was diagnosed with a lung condition but said she can’t afford her needed breathing treatments without health insurance. “I can’t sleep, and now it’s getting to me,” she said through tears. “I’m not focused because of the stress level I’m at. Health-wise, your stomach hurts all the time. It’s mental and physical.” But she said she’s hopeful things will improve soon. Shiplett has participated in an intensive, three-week job search and placement course at The Job Center in Akron. Stacy states: “It’s a big help. It takes that stress level down.” For some individuals, the stresses of dealing with a layoff and the difficulty of finding a new job are even bad for their health. Take the cases of Raymond and Melissa Gibbons. Since Raymond unexpectedly lost his job as a truck driver when his employer closed, his blood pressure skyrocketed to 170/107, well above the normal range of 120/80. These days, Melissa often suffers from headaches. And neither can sleep more than a couple of hours most nights. They’re too worried about how to pay their bills and provide for their four children, ranging in age from 11 weeks to 9 years. Raymond states: “We have young kids, so they expect Santa Claus to be there. The trucking industry was not hiring during the deep recession.”1 The experiences of Charlene and Duane Jeter, Thomas and Jennifer Dodson, Joyce Ellis, Stacy Shiplett, and Raymond and Melissa Gibbons are snapshots of the various stress levels and coping mechanisms employed by the millions of individuals laid off in the recent recession. Even for those not laid off, 50 percent of the respondents in one recent survey indicated they are experiencing stress from financial concerns.2 Layoffs are typically stressful experiences, but the stress is magnified when alternative and equivalent job opportunities are scarce to none. This opening feature also illustrates that individuals cope with stressful situations differently. For example, Thomas Dodson even came to perceive several positive outcomes from his layoff. Our focus in this chapter is not simply about the stresses and coping mechanisms associated with layoffs. Rather, its scope is much broader. We discuss (1) the nature of stress, (2) the key causes of stress, (3) the effects of stress, (4) the role of personality differences in handling stress, (5) insights to help manage stress, and (6) core dimensions of workplace aggression. Beyond the personal stress of a job layoff, on-the-job stress is a common and costly problem in the workplace, leaving few workers untouched. For example, surveys of workplace stress and aggression report the following: Sixty-five percent of respondents said that workplace stress had caused physical • and psychological difficulties, and more than 10 percent described these as having major effects. • Forty percent of respondents view their jobs as very or extremely stressful. Chapter 8 Workplace Stress and Aggression 221 Forty-eight percent said that excessive stress makes it hard for them to perform well on the job. Fourteen percent of respondents had felt like striking a coworker in the past year, • but didn’t. • Twenty-five percent had felt like screaming or shouting because of job stress; 10 percent are concerned about an individual at work they fear could become violent.3 Leaders who ignore employee stress, or assign it a low priority, are likely to see declines in productivity and morale and increased legal costs. The negative consequences of stress are so dramatic that leaders need to (1) take action to reduce excessive employee stress in the workplace and (2) assist employees in developing stress-coping skills. • Concept of Stress Stress is the excitement, feeling of anxiety, and/or physical tension that occurs when the demands or stressors placed on an individual are thought to exceed the person’s ability to cope.4 This is the most common view of stress and is often called distress or negative stress. Stressors can take various forms, but they all have one thing in common: Stressors create stress or the potential for stress when an individual perceives them as representing a demand that exceeds that person’s ability to respond. Fight-or-Flight Response Numerous changes occur in a person’s body during a stress reaction. Breathing and heart rates increase so that the body can operate with maximum capacity for physical action. Brain wave activity goes up to allow the brain to function maximally. Hearing and sight become momentarily more acute, and muscles ready themselves for action. An animal attacked by a predator in the wild basically has two choices: to fight or to flee. The animal’s bodily responses to the stressor (the predator) increase its chances of survival. The fight-or-flight response refers to the biochemical and bodily changes that represent a natural reaction to an environmental stressor.5 Similarly, cave-dwelling ancestors benefited from this biological response mechanism. People gathering food away from their caves would have experienced a great deal of stress upon meeting a saber-toothed tiger. In dealing with the tiger, they could have run away or stayed and fought. The biochemical changes in their bodies prepared them for either alternative and contributed to their ability to survive. The human nervous system still responds the same way to stressors. This response continues to have survival value in a true emergency. However, for most people most of the time, the “tigers” are imaginary rather than real. In work situations, for example, a fight-or-flight response usually isn’t appropriate. If an employee receives an unpleasant work assignment from a leader, physically assaulting the leader or storming angrily out of the office obviously is professionally inappropriate. Instead, the employee is expected to accept the assignment calmly and do the best job possible. Remaining calm and performing effectively may be especially difficult when the employee perceives an assignment as threatening and the body is prepared to act accordingly. Medical researcher Hans Selye first used the word stress to describe the body’s biological response mechanisms. Selye considered stress to be the nonspecific response of the human body to any demand made on it.6 However, the body has only a limited capacity to respond to stressors. The workplace makes a variety of demands on people, and too much stress over too long a period of time will exhaust their ability to cope with those stressors. Learning Goal 1. Explain the concept of and influences on creating stress. 222 Part 2 The Individual in Organizations Influences on the Stress Experience A variety of factors influence how an individual experiences stress, especially severe stress. Figure 8.1 identifies four of the primary factors: (1) the person’s perception of the situation, (2) the person’s past experiences, (3) the presence or absence of social support, and (4) individual differences in reacting to stress. Perception In Chapter 4, we defined perception as the process by which people select, organize, interpret, and respond to information from the world around them. Employee perceptions of a situation can influence how (or whether) they experience stress. For example, two employees, Tina and John, have their job responsibilities substantially changed—a situation likely to be stressful for many people. Tina views the new responsibilities as an opportunity to learn new competencies. She perceives the change to be a vote of confidence from management in her ability to be flexible and take on new challenges. In contrast, John perceives the same situation to be extremely threatening. He concludes that management is unhappy with his performance and is using this as a tactic to make him fail so that he can be fired. Recall from the opening feature that when Charlene Jeter was laid off as a vice president from SunTrust MidAtlantic after 28 years, she could not find another job. This experience is highly stressful for her. Past Experiences John may perceive a situation as more or less stressful based on how familiar he is with the situation and his prior experiences with the particular stressors involved. Past practice or training may allow Tina to deal calmly and competently with stressors that would greatly intimidate less experienced or inadequately trained employees. The relationship between experiences and stress is based on reinforcement (see Chapter 5). Positive reinforcement or previous success in a similar situation can reduce the level of stress that a person experiences under certain circumstances. In contrast, punishment or past failure under similar conditions can increase stress under the same circumstances. Also, recall Joyce Ellis’s past experiences in the opening feature that have helped her cope with the stresses of being phased out of an accounting position at a construction company. As one of 10 children, Ellis reported that she learned to be frugal and indicated it came in handy when she was laid off from another job seven years prior to the current job. Ellis planned her expenses so she would be okay if unemployed. Remember her quote: “That’s all preplanning, not getting in over your head when the mortgage company says you can afford much more.” Words of wisdom, indeed! FIGURE 8 .1 Common Influences on the Stress Experienced by an Individual Influenced by the Individual’s Stressors from Work and the Environment • Perceptions • Past experiences • Social support • Individual differences Level of Stress Experienced Chapter 8 Workplace Stress and Aggression 223 Social Support The presence or absence of other people influences how individuals in the workplace experience stress and respond to stressors.7 The presence of coworkers may increase John’s confidence, allowing him to cope more effectively with stress. For example, working alongside someone who performs confidently and competently in a stressful situation may help John behave similarly. Conversely, the presence of fellow workers may irritate Tina or make her anxious, reducing her ability to cope with stress. Recall the importance of the social support Jennifer Dodson gave her spouse Thomas when he was laid off. Ethics Insight At some plants, we have six-week unpaid layoffs on a rolling basis. A big concern for a lot of employees is “Am I going to have a job?” This way, it’s a comfort to them—like having six weeks off, and still having a job to come back to. We’ve been doing this for two years now. Employees feel like they have some sort of control, and they almost always come back. Individual Differences Stacy Guinn, HR Coordinator, Sherwin-Williams Each person’s motivation, attitudes, personality, and abilities influence the degree and nature of work stress experienced and how the individual responds.8 What one person considers a major source of stress, another may hardly notice. Personality characteristics, in particular, may explain some of the differences in the ways in which an employee experiences and responds to stress. For example, the Big Five personality factor that we labeled emotional stability in Chapter 3 seems to be important in individual responses to various stressors in the work setting. Individuals who are emotionally stable (described as stable, relaxed, resilient, and confident) are more likely to cope well with a wide variety of work stressors. In contrast, individuals who are lacking in emotional stability (described as reactive, nervous, and self-doubting) typically have greater difficulty coping with the same stressors. We further discuss relationships between personality and stress in this chapter. Primary Stressors Learning Goal Employees often experience stress in both their personal and work lives. Understanding these two sources of stress and their possible interaction is important. To consider either source in isolation may give an incomplete picture of the stress that an employee is experiencing. However, our primary focus is on workrelated stressors. Work-Related Stressors Work-related sources of stress take a variety of forms. Figure 8.2 presents a framework for thinking about and diagnosing organizational sources of work-related stress. It identifies seven principal work-related stressors. This framework shows that internal individual factors influence the ways in which each employee experiences these stressors. For some employees, having too much work to do and not enough time or resources to do it is a major stressor. Role overload exists when the demands of the job exceed the capacity of the individual to meet all of the demands adequately. Some employees may be in a continuous condition of role overload. Surveys commonly identify work overload or “having to work too hard” as a major source of stress.9 LWA/GETTY IMAGES Workload 2. Identify the primary sources of work-related stressors. Having too much work to do can cause stress for some employees. ▼ 224 Part 2 The Individual in Organizations FIGURE 8 .2 Work-Related Stressors and Experienced Stress Work-Related Stressors • Workload • Job conditions • Role conflict and ambiguity • Career development • Interpersonal relations • Workplace aggression Influenced by the Employee • Perceptions • Past experiences • Social support Level of Stress Experienced • Individual differences • Conflict between work and life roles Having too little work to do also may create stress. Have you ever had a job with so little to do that the workday seemed to never end? If so, you can understand why employees may find too little work to be stressful. Leaders sometimes are guilty of trying to do their subordinates’ work, or micromanage, when their jobs aren’t challenging enough. Micromanaging might reduce the manager’s stress caused by boredom, however, it is likely to increase subordinates’ stress because the superior constantly watches them or second-guesses their decisions. Job Conditions Poor working conditions represent another important set of job stressors. Temperature extremes, loud noise, too much or too little lighting, radiation, and air pollution are but a few examples of working conditions that can cause stress in employees. Heavy travel demands or long-distance commuting are other aspects of jobs that employees may find stressful. Poor working conditions, excessive travel, and long hours all add up to increased stress and decreased performance. Cutting-edge technology, while clearly of great benefit to society in general and many individuals in particular, nevertheless has created job conditions that may be quite stressful. Many employees are receiving massive volumes of e-mail, text messages, phone calls, and voice mail messages. It is often easy to perform work anytime, anyplace.10 For some employees, this makes it difficult to draw mental boundaries between work and home. Role Conflict and Ambiguity Role conflict refers to differing expectations of or demands on a person at work that become excessive. (We discuss role conflict further in Chapter 13.) Role ambiguity occurs when an employee is uncertain about assigned job duties and responsibilities. Role conflict and role ambiguity may be particularly significant sources of job-related stress. Many employees suffer from role conflict and ambiguity because of conflicting expectations from leaders (e.g., cut prices, yet achieve higher profits). Having responsibility for the behavior of others and a lack of opportunity to participate in important decisions affecting their jobs are other aspects of employees’ roles that may be stressful.11 Chapter 8 Workplace Stress and Aggression Career Development Major stressors related to career planning and development involve job security, promotions, transfers, and developmental opportunities. An employee can feel stress from underpromotion (failure to advance as rapidly as desired) or overpromotion (promotion to a job that exceeds the individual’s competencies). The current wave of reorganizations and downsizings seriously threatens careers and causes stress. For example, the Boston Globe newspaper recently announced that it is eliminating 50 full-time jobs—12 percent of its news and editorial staff. The workforce reduction represents an effort to save money, be more efficient, and return to profitability. This is the fifth staff reduction since 2001. In the year prior to this announcement, there was a reduction of 42 Boston Globe managers and team leaders in the advertising, circulation, and marketing departments.12 When jobs, teams, departments, or entire organizations are restructured, employees often have numerous career-related concerns: Can I perform competently in the new situation? Can I advance? Is my new job secure? Typically, the remaining employees find these concerns very stressful. At the Boston Globe, the employees not laid off face the stress of thinking more reductions are likely in the future since there have been so many in recent years and what that might mean for their careers. In a recent survey of downsizing survivors, two-thirds of the respondents used the following words to reflect their feelings: guilt, anxiety, and anger. Contrary to what might be expected, 74 percent of the survivors say their personal output has declined and 77 percent see more errors and mistakes being made.13 Interpersonal Relations Teams and groups have a great impact on the behavior of employees. (We explore these dynamics in Chapter 12.) Good working relationships and interactions with peers, subordinates, and superiors are crucial aspects of organizational life, helping employees achieve personal and organizational goals. When relationships are poor, they can become sources of stress. A high level of political behavior, or “office politics,” may create stress for leaders and employees. The nature of relationships with others often influences how employees react to other stressors. In other words, interpersonal relationships can be either a source of stress or the social support that helps employees cope with stressors. In a recent survey, 53 percent of employees lost work time worrying about an incident of incivility. Workplace incivility refers to rudeness, lack of regard for one another, and the violation of workplace norms for mutual respect.14 Forty-six percent contemplated changing jobs over incivility. In most instances, the manager is reported to be the instigator of the incivility. In addition, widespread workplace incivility has been found to negatively impact individual and organizational performance.15 The following Communication Competency feature reports on communication incidents of several individuals who were subjected to workplace incivility.16 It presents the violations of various attributes of the communications competency by instigators of the workplace incivility. All names have been disguised, but the incidents are real. Communication competency Workplace Incivility: How Not to Communicate Lucy quit her job in university administration after finding herself routinely ignored and undermined by a manager. On one occasion, the manager returned from leave and sent everyone in the department except Lucy an e-mail thanking them for their work during her absence. On another, she told some of Lucy’s peers that Lucy could not be trusted. Lucy says things rapidly went 225 226 Part 2 The Individual in Organizations downhill. “I found it exceptionally rude. It made me extremely negative towards her. It shut me down. I felt she was someone I didn’t really want to get to know or work with. Communication became very poor, which made the job difficult.” Bill comments: “One so-called member of the local management team regularly makes snide comments by e-mail and presses the ‘Send’ button as he puts on his coat and heads for home, knowing he won’t see the people he’s targeting for several days because of their work hours.” Ben reports: “I was pulling off a payoff preparation cycle for a month during December, and I entered ‘12’ (the calendar month) when I should have entered ‘6’ (the fiscal month). The payroll cycle was garbage therefore. The accountant called me insulting names with my new boss sitting right next to me. It was humiliating and unfair. It was my first payroll preparation cycle with the company, I was new—it was an honest mistake.” Argie recalls: “I was making a presentation to all of the company’s international country managers and vice presidents. The division president stood up and shouted, ‘No one is interested in this stuff.’ His comment made me so nervous and upset that I could barely go on. I had been with this company for many years; you’d think he could have offered me a little respect for that alone.” Richard, a manager, says: “My two bosses, the company co-founders of an architectural interior-design firm, rarely converse with their workers. They treat employees like we’re not even here. The company often receives gift baskets from vendors and the bosses hoard it in their offices. They invited only half of their employees to the holiday office party.” Susan, a public relations manager, reports: “My boss called my cell phone while I was sitting in an airplane on the runway. As the flight attendants announced that all phones had to be shut off, my boss said, ‘This isn’t a good fit anymore, so come by after 5:30 tomorrow to pick up your things.’ ” Workplace Aggression A disturbing source of stressors is workplace aggression. We discuss four types of workplace aggression in the last major part of this chapter: bullying, sexual harassment (which was also discussed in Chapter 2), workplace violence, and aggression toward the organization itself. Conflict between Work and Life Roles A person has many roles in life (employee, family member, Little League coach, church volunteer, to name just a few). Only one of these roles is associated with work (although some individuals may hold more than one job at a time). Work typically meets only some of a person’s goals and needs. In addition, life goals and needs may conflict with career goals, presenting a source of stress. For example, employees’ personal desires to spend time with their families or have more leisure time may conflict with the extra hours they must work to advance their careers. The large number of dual-career couples with children has brought work and family role conflicts into sharp focus. For example, when the children are sick, who takes primary responsibility for taking them to the doctor or staying home with them? Life Stressors The distinction between work and nonwork stressors isn’t always clear, although a primary source of stress for many employees clearly is pressures between work and family demands.17 As Figure 8.3 illustrates, both work and family pressures may contribute to work–family stress because pressures in one area can reduce a person’s ability to cope with pressures in the other. These incompatible pressures trigger stress, which, Chapter 8 Workplace Stress and Aggression FIGURE 8 . 3 Path of Work–Family Pressures, Stress, and Conflict Possible Results Severe Work versus Family Pressures Leads to Work– Family Conflicts Creates Stress on the Employee • Dissatifaction • Frustration • Depression • Other in turn, leads to work–family conflicts. These conflicts trigger possible outcomes such as dissatisfaction, frustration, and depression. Life stressors are tensions, anxieties, and conflicts that stem from pressures and demands in people’s personal lives. People must cope with a variety of life stressors; they deal with these stressors differently because of personality, age, gender, experience, and other characteristics. However, life stressors that affect almost everyone are those caused by significant life changes: divorce, marriage, death of a family member, and the like. People have a limited capacity to respond to stressors. Too much change too quickly can exhaust the body’s ability to respond and result in negative consequences for a person’s physical and mental health. Table 8.1 presents a variety of stressful events that college students may face. Based on a current social readjustment rating scale, each event is rated on a 100-point scale,18 with 1 indicating an event that is not stressful and 100 an extremely stressful event. An event labeled “high level of stress” might be assigned 71 to 100 points, depending on the specific stress experienced by the student. “Moderate level of stress” for an event might be scored from 31 to 70 points, and a “low level of stress” for an event may be assigned scores from 1 to 30 points by the student. During the course of a year, if a student experiences several events in the high level of stress range, there is a TABLE 8 .1 Stressful Events for College Students EVENTS HAVING HIGH LEVELS OF STRESS EVENTS HAVING RELATIVELY LOW LEVELS OF STRESS • • • • • • • • • • Death of parent Death of spouse Divorce Flunking out Unwed pregnancy Change in eating habits Change in sleeping habits Change in social activities Conflict with instructor Lower grades than expected EVENTS HAVING MODERATE LEVELS OF STRESS • Academic probation • Change of major • Death of close friend • Failing important course • Finding a new love interest • Loss of financial aid • • • • Major injury or illness Parents’ divorce Serious arguments with romantic partner Outstanding achievement Source: Adapted from Baron, R. A., and Byrne, D. Social Psychology: Understanding Human Interaction, 6th ed. Boston: Allyn & Bacon, 1991, 573. 227 228 Part 2 The Individual in Organizations 50–50 chance the student will get sick and his or her grades will suffer as a result of the excessive stress. How many of the events in Table 8.1 did you experience last year? Recall that stress is the body’s general response to any demand made on it. The list of stressful events in Table 8.1 contains both unpleasant events, such as failing a course, and pleasant events, such as finding a new love interest. This dual nature of life stressors demonstrates that they involve both negative and positive experiences. For example, vacations and holidays actually may be quite stressful for some people but very relaxing and refreshing for others. In addition, viewing unpleasant life events as having only negative effects is incorrect. People often can both cope with and grow from experiencing unpleasant events. Recall Thomas Dodson from the opening feature. He experienced severe stress as a result of being laid off by the architecture firm where he worked. He immediately started his own consulting firm. He has found the work to be rewarding and challenging, but an “immense struggle financially.” Of course, people typically enjoy the positive effects and stimulation of pleasurable events, such as significant accomplishments, vacations, or gaining a new family member. Learning Goal 3. State the potential impacts of severe stress on health, performance, and job burnout. Severe Stress High levels of stress can have both positive and negative effects. Our concern with severe and continuous work stress over time focuses on the negative effects because of their potential impacts on individual and organizational effectiveness as well as one’s health. The potential impacts of severe stress levels occur in three main areas: physiological, emotional, and behavioral.19 Examples of the effects of severe distress in these areas are as follows: • Physiological effects of severe stress may include increased blood pressure, increased heart rate, sweating, hot and cold spells, breathing difficulties, muscular tension, gastrointestinal disorders, and panic attacks. • Emotional effects of severe stress may include anger, anxiety, depression, low selfesteem, poor intellectual functioning (including an inability to concentrate and make decisions), nervousness, irritability, resentment of supervision, and job dissatisfaction. • Behavioral effects of severe stress may include poor performance, absenteeism, high accident rates, high turnover rates, alcohol and substance abuse, impulsive behavior, and difficulties in communication. The effects of severe work stress have important implications for organizational behavior and organizational effectiveness. We examine some of these effects in terms of health, performance, and job burnout. Impacts on Health Health problems commonly associated with severe stress include back pain, headaches, stomach and intestinal problems, upper respiratory infections, and various mental problems. Although determining the precise role that such stress plays in individual cases is difficult, some illnesses appear to be stress related.20 Recall the layoff of Raymond and Melissa Gibbons in the opening feature. His blood pressure skyrocketed and he couldn’t sleep. Melissa experienced headaches and also couldn’t sleep. Stress-related illnesses place a considerable burden on people and organizations. The costs to individuals seem more obvious than the costs to organizations. Let’s review some of the organizational costs associated with stress-related disease. First, costs to employers include increased premiums for health insurance, as well as lost workdays from a serious illness (e.g., ulcers) and less serious illnesses (e.g., headaches). Estimates are that each employee who suffers from a stress-related illness loses an average of 16 days of work a year. In addition, it is estimated that health-care costs are 50 percent higher for employees who report higher levels of stress.21 Second, Chapter 8 Workplace Stress and Aggression more than three-fourths of all industrial accidents are caused by a worker’s inability to cope with stress-related emotional problems. Third, legal problems for employers grow when they fail to address the intense stress they may be causing. The number of stress-related worker compensation claims is increasing. The link between the levels of stress in the workplace and worker compensation claims is clear. When employees experience severe stress over time, more worker compensation claims are filed. Studies have shown similar patterns in many different industries.22 Post-traumatic stress disorder is a psychological disorder brought on, for example, by horrible experiences in combat during wartime, acts of violence and terrorism, and the like.23 Courts are now recognizing post-traumatic stress disorder as a condition that may justify a damage claim against an employer. Employees have successfully claimed suffering from this disorder as a result of sexual harassment, violence, and other traumatic circumstances in the workplace. Awards of damages in the millions of dollars have resulted from court cases involving workplace post-traumatic stress disorder claims. Impacts on Performance The positive and negative effects of stress are most apparent in the relationship between stress and performance. Figure 8.4 depicts the general stress–performance relationship in the shape of an arch. At low levels of stress, employees may not be sufficiently alert, challenged, or involved to perform at their best. As the curve indicates, FIGURE 8 .4 Typical Relationship between Performance and Stress Arousal Good Stress Distress High Fatigue Performance Exhaustion Comfort zone Ill health Low Healthy tension Low Arousal Stress Adapted from Nixon, P. Stress: The human function curve. American Institute of Stress. www.stress.org (March 2007). High 229 Part 2 The Individual in Organizations increasing the arousal of stress may improve performance—but only up to a point. An optimal level of stress probably exists for most tasks. Beyond that point, performance begins to deteriorate.24 At excessive levels of stress, employees are too agitated, aroused, or threatened to perform well. Leaders need to consider the optimum stress points for both themselves and their subordinates. The causes for these points, however, are difficult to pin down. For example, an employee may be absent from work frequently because of boredom (too little stress) or because of overwork (excessive stress). The curve shown in Figure 8.4 changes with the situation; that is, it varies for different people and different tasks. Too little stress for one employee may be just right for another on a particular task. Similarly, the optimal amount of stress for a specific individual for one task may be too much or too little for that person’s effective performance of other tasks. As a practical matter, leaders should be more concerned about excessive stress than with how to add to stress. Motivating individuals to perform better is always important, but attempting to do so by increasing the level of severe stress is typically shortsighted. Studies of the stress–performance relationships in organizations often show a strong negative association between severe stress in a team or department and its overall performance. That is, high levels of employee stress over an extended period of time often lead to lower productivity. This negative relationship indicates that these work settings are operating on the right-hand side (excessive stress arousal) of the curve shown in Figure 8.4. Leaders and employees in these situations need to find ways to reduce the number and magnitude of stressors. KEITH BROFSKY/PHOTODISC/GETTTY IMAGES 230 ▲ Common indicators of job burnout include emotional exhaustion, chronic fatigue, tiredness, and a sense of being physically run down. Impacts on Job Burnout Job burnout refers to the adverse effects of working conditions under which strong stressors are perceived as unavoidable and relief from them is interpreted as unavailable. Common indicators of burnout include: • emotional exhaustion, including chronic fatigue, tiredness, and a sense of being physically run down; • depersonalization of individuals, including cynicism, negativity, and irritability toward others; and • feelings of low personal accomplishment, including losing interest and motivation to perform, inability to concentrate, and forgetfulness.25 Depersonalization is the treatment of people as objects. For example, a nurse might refer to the “broken knee” in room 405, rather than use the patient’s name, such as Ms. Wiley. Doing so allows the nurse to disassociate from the patient as a person. The patient just becomes another thing to be treated according to rules and procedures. Most job burnout research has focused on the human services sector of the economy—sometimes called the “helping professions.” Burnout is thought to be most prevalent in occupations characterized by continuous direct contact with people in need of aid. The highest probability of burnout occurs among those individuals who have both a high frequency and a high intensity of interpersonal contact. This level of interpersonal contact may lead to emotional exhaustion, a key component of job burnout.26 Those who may be most vulnerable to job burnout include social workers, soldiers in war zones, nurses, police officers, and teachers. Burnout also may affect leaders or shop owners who are under increasing pressure to reduce costs, increase Chapter 8 Workplace Stress and Aggression 231 profits, and better serve customers. Individuals who experience job burnout seem to have some common characteristics. Three characteristics are associated with a high probability of burnout: experiencing a great deal of negative stress as a result of job-related stressors, • • • tending to be idealistic and self-motivating achievers, and seeking unattainable goals.27 The burnout syndrome represents a combination of certain individual attributes and the job situation. Individuals who suffer from burnout often have unrealistic expectations concerning their work and their ability to accomplish desired goals, given the nature of the situation in which they find themselves. Job burnout is not something that happens overnight. The entire process typically takes a great deal of time. The path to job burnout is illustrated by Figure 8.5. One or more of the working conditions listed, coupled with the unrealistic expectations or ambitions of the individual, can lead eventually to a state of complete physical, mental, and emotional exhaustion. Under conditions of burnout, the individual can no longer cope with the demands of the job and willingness to try drops dramatically. Individual Differences and Stress Learning Goal Several individual differences are related to stress, including self-esteem and locus of control (personality attributes discussed in Chapter 3). Individual differences may affect how a person will perceive and react to a situation or an event as a stressor.28 For example, an individual with low self-esteem is more likely to experience stress in highly demanding work situations than is a person with high self-esteem. Individuals high in self-esteem typically have more confidence in their ability to meet intense job demands than do those with low self-esteem. Employees with high internal locus of control may take more effective action, more quickly, in coping with a sudden and critical emergency (a stressor) than might employees with a high external locus of control. Individuals high in internal locus of control are likely to believe that they can moderate the highly stressful situation. Before reading further, please respond to the statements in Table 8.2. This self-assessment exercise is related to the discussion that follows. 4. Describe how individual differences influence reactions to stressful situations. FIGURE 8 . 5 The Path to Job Burnout Working Conditions Produce: Constant Pressure Insecurity Competition Conflict Economic Problems Loneliness Other Leading to: Unfulfilled expectations Lack of meaning Lack of control Overwork Poor decisions Culminating in: Stress Exhaustion Frustration Helplessness Depersonalization Job Burnout 232 Part 2 The Individual in Organizations Text not available due to copyright restrictions The Type A Personality The Type A personality refers to a person involved in a never-ending struggle to achieve more and more in less and less time. In contrast, the Type B personality refers to a person who tends to be easygoing and relaxed, patient, a good listener, and takes a long-range view of things. Characteristics of the Type A personality include: Chapter 8 • • Workplace Stress and Aggression a chronic sense of urgency about time; an extremely competitive, almost hostile orientation; thinking about other things or text messaging while talking to someone; an impatience with barriers to task accomplishment; and • a sense of guilt when relaxing or taking a vacation.29 Two medical researchers first identified the Type A personality when they noticed a recurrent personality pattern in their patients who suffered from premature heart disease.30 In addition to the characteristics just listed, extreme Type A individuals often speak rapidly, are preoccupied with themselves, and are dissatisfied with life. They tend to give quick replies to questions with no pause to deliberate before answering the questions. Type A personalities may give sarcastic, rude, and hostile responses. They may try to appear to be humorous, but with the underlying intent to be hurtful. The questionnaire in Table 8.2 measures four sets of behaviors and tendencies associated with the Type A personality: (1) time urgency, (2) competitiveness and hostility, (3) polyphasic behavior (trying to do several things at once), and (4) a lack of planning. Medical researchers have discovered that these behaviors and tendencies often relate to life and work stress. They tend to cause stress or make stressful situations worse than they otherwise might be. Current research suggests that the Type A personality description is too broad to predict adverse health impacts accurately. Rather, research now indicates that only certain aspects of the Type A personality—particularly anger, hostility, and aggression—may be related to severe stress and health reactions.31 Type A individuals with these specific attributes appear to be two to three times more likely to develop health problems than are Type B individuals. • • The Hardy Personality What aspects of personality might protect individuals from the negative health impacts of stress? Individual traits that seem to counter the effects of severe stress are known collectively as the hardy personality—the personality of a person with a cluster of characteristics that includes feeling a sense of commitment, responding to each difficulty as representing a challenge and an opportunity, and perceiving that one has control over one’s own life.32 The hardy personality is characterized by: • a sense of personal control over events in one’s life; • a tendency to attribute one’s own behavior to internal as opposed to external causes (recall the discussion of attribution in Chapter 4); • a strong commitment to work and personal relationships; not detaching oneself when the going gets tough; and • an ability to view unexpected change or potential threats as challenges and opportunities for growth.33 A high degree of hardiness reduces the negative effects of stressful events. Hardiness seems to reduce stress by altering the way in which people perceive stressors. An individual having a low level of hardiness perceives some events or situations as stressful; an individual having a high level of hardiness perceives fewer events or situations as stressful. A person with a high level of hardiness isn’t overwhelmed by challenging or difficult situations. Rather, faced with a severe stressor, the hardy personality copes or responds constructively by trying to find a solution—to control or influence events and situations. This behavioral response typically reduces stress reactions, moderates blood pressure increases, and reduces the probability of adverse health impacts. Through development of the self competency, a person may come to reflect the attributes of the hardy personality. Recall from Chapter 1 that the self competency involves the ability to assess your own strengths and weaknesses, set and pursue professional and personal goals, balance work and personal life, and engage in new learning—including new or changed skills, behaviors, and attitudes. Table 8.3 provides 233 234 Part 2 The Individual in Organizations TABLE 8 . 3 Assessing Your Sense of Hardiness Instructions: Please respond to each of the statements below as truthfully as you can. Use the following scale: Not like me Seldom Sometimes 0 1 2 When I think about it 3 Usually Always 4 5 ______ 1. ______ 2. ______ 3. I have a set of things that I would like to accomplish in my life. I spend quiet time thinking about my life and my world. When I think about it, I wake up in the morning full of optimism and I look forward to starting my day. ______ 4. I have a clear picture of what the next phase of my life will look like. ______ 5. I try to learn new things. ______ 6. I sleep well and am able to relax when I have free time. ______ 7. I believe that I have control over most things in my life. ______ 8. I look forward to the changes that happen in my life and view them as challenges. ______ 9. I have goals in life and I am clear on what they are. ______ 10. I am usually an optimistic person when it comes to how I view my future. ______ 11. I am adventuresome, continually pushing to try new things. ______ 12. I would consider myself to be very goal oriented. Score: Add points for items 1 through 12 = _____. Possible Interpretations of Your Hardiness Score: • 0–24 You likely don’t feel that you can control your world and you don’t spend a lot of time making plans. Your ability to handle stress is not as high as you would like. • 25–36 You do some planning, but probably wish you did more. You tend to be “other directed” and not always in control of your life. • 37–48 You are more self-directed and normally handle stress well. You tend to be goal oriented, though you could be more focused on setting goals. • 49–60 You are very goal oriented and know the difference between being stressed and handling stress. Source: Adapted from Retirement Lifestyle Centers. How hardy is your personality? www.retirementlifestyle .com (April 2007). a brief questionnaire for you to reflect on your own sense of hardiness. If you perceive your sense of hardiness is lacking, the good news is that you can do something about it. We provide suggestions in this chapter and others for developing your hardiness. Captain Chesley B. Sullenberger III, the pilot of US Airways Flight 1549, which he safely landed in the Hudson River, appears to reflect the attributes of the hardy personality. The following Self Competency feature reports on his handling of the jetliner when both engines were disabled by a large flock of birds shortly after departing La Guardia Airport on January 15, 2009.34 Self competency Chesley B. Sullenberger III, Captain of US Airways Flight 1549 Some individuals suggest that Sullenberger spent practically his whole life preparing for the five-minute nightmare that was US Airways Flight 1549. He obtained his pilot’s license at 14, was named best aviator in his class at the Air Force Academy, flew fighter jets, investigated Chapter 8 air disasters, mastered glider flying, and studied the psychology of how cockpit crews behave in a crisis. When the ultimate test came on a descent over the Hudson River, he spoke into the intercom only once and gave perhaps the most terrifying instruction a pilot can give—“Brace for impact” —with remarkable calm. And as the 150 passengers of Flight 1549 marveled at their hero pilot’s skills and cool head, they learned what friends and relatives of Sullenberger say they had known all along. “This is someone who has not just spent his life flying airplanes but has actually dug very deeply into what makes these things work, and I think he proved it,” said Robert Bea, a civil engineer who knows Sullenberger (affectionately known as “Sully”). Bea adds: “He is, how should I call it, a humble man. But he is damned smart.” His wife, Lorraine, called her husband a “pilot’s pilot” who “loves the art of the airplane.” She described him, as almost everyone else had, as controlled and professional. She states: “This is the Sully I know. I always knew how he would react. So to me this is not something unusual. It’s the man I know.” His sister, Mary Margaret Wilson, said Sully built model airplanes, taking care to paint even the most minuscule details on the faces of the pilots. Wilson, recalling her brother’s childhood crop duster flights at the age of 15, said she was usually nervous flying in small planes—but never with him. She said he was always professional and never cut corners. Wilson notes: “I think Sully is a very duty-oriented person. He is always looking to get better. He would be the one person who could land a plane in the water without any engines.” Workplace Stress and Aggression 235 Robert Bea, cofounder of UC Berkeley’s Center for Catastrophic Risk Management, said he could think of few pilots as well situated to bring the plane down safely as Sullenberger. Bea notes that Sully has been studying the psychology of helping airline crews function even in the face of a crisis. Bea adds: “When a plane is getting ready to crash with a lot of people who trust you, it is a test. Sully proved the end of the road for that test. He had studied it, he had rehearsed it, he had taken it to his heart.” David Love, recently retired, has known Sully since the 1980s when he was a pilot at US Airways. Love describes his friend as a well-spoken, welleducated, dedicated pilot who takes his job and profession very seriously and is an expert on airline safety. He said Sully would brush off the notion that he was a hero. “If he were here, Sully would say that his team functioned flawlessly,” Love said. New York Mayor Michael Bloomberg commented: “The pilot did a masterful job of landing the plane in the river and then making sure that everybody got out. He walked the plane twice after everybody else was off, and tried to verify that there was nobody else on board, and he assures us there was not.” As the cabin took on water, Sully climbed out of the jet only after the four other crew members and 150 passengers made their orderly exit. When he reached a raft, someone on a ferry tossed him a knife, and he cut away the tether to the jet. Sullenberger is also a cofounder of the Safety Reliability Methods company. This firm provides consulting services in such areas as risk evaluation, improved safety, and creating high-reliability organizations. To learn more about Safety Reliability Methods, go to http://safetyreliability.com. Stress Management Individual and leader insights to help employees cope with stress are increasingly important as stress has become a more widely recognized organizational problem. A number of insights are available to individuals and leaders for effective stress management and reducing the potential harmful impacts of stress. Stress management refers to the actions and initiatives that reduce stress by helping the individual understand the stress response, recognize stressors, and use coping techniques to minimize the negative impacts of severe experienced stress.35 Learning Goal 5. Apply individual and leader insights to the management of workplace stress. 236 Part 2 The Individual in Organizations Insights for Individuals Individuals can use stress management practices that are designed to (1) eliminate or control the sources of severe stress and (2) make the individual more resistant to or better able to cope with severe stress. The first step in stress management involves recognizing the stressors that are affecting the person’s life. Next, the individual needs to decide what to do about them. Personal goals and values, coupled with practical stress management skills, can help an individual cope with stressors and reduce negative stress reactions. Some of the insights for managing severe and ongoing stress by an individual include the following: • Plan ahead and practice good time management. Frame your aspiration (e.g., getting a job) as something you’d really like to achieve, rather than in absolute terms (e.g., I absolutely must get a job now). Change Insight • Get plenty of exercise, eat a balanced diet, get adequate rest, The to-do list is infinite. For every big priand generally take care of yourself. ority you put on the to-do list, you need a • View the difficulties you encounter as opportunities to learn corresponding item on the stop-doing list. and challenges to be tackled, rather than as problems to be It’s like an accounting balance. solved or difficulties to overcome. Jim Collins, Author, Good to Great • Recognize and minimize the tendency to be a perfectionist. • Concentrate on balancing your work and personal life. Always take time to have fun. • Learn relaxation techniques and maintain a sense of humor. • Communicate with those who can provide social support and take action to help reduce the severe and ongoing stressors.36 An individual can use relaxation techniques during the workday to cope with intense job demands. For example, a common “relaxation response” to stress is to (1) choose a comfortable position, (2) close your eyes, (3) relax your muscles, (4) become aware of your breathing, (5) maintain a passive attitude when thoughts surface, and (6) continue for a set period of time (e.g., 20 minutes).37 At work, the application of the knowledge, skills, and abilities of the communication competency is vital in coping with intense stress. Consider the insights of Steve Widom, one of the founders and chief technology officer at Chordial Solutions, a firm that provides enterprise software and services to businesses. It is located in The Colony, Texas (near Dallas). In information technology (IT) jobs, Widom contends that severe stress is more manageable when you learn to expect the occasional 2:00 a.m. call about a system that’s down. He chuckles: “If systems were perfect, we would be bored. When we signed up for IT, we knew what we were getting into.” Because IT is project based, Widom emphasizes that severe stress comes in waves and smart stress management involves riding those waves skillfully. When those times come, he works as hard as those employees who report to him. Widom states: “When they work all night, I’m there with them. My rule of thumb is, for every all-nighter you pull, you need two days of comp time.”38 Insights for Leaders Leaders often have the authority to approve organizational stress management programs that are designed to reduce the harmful effects of severe stress (distress) in one or more of the following ways: (1) Identify and reduce or eliminate intense work stressors, (2) assist employees in changing their perceptions of the stressors and experienced stress, and (3) assist employees to cope more effectively with the outcomes from severe stress. Chapter 8 Workplace Stress and Aggression Reducing Work Stressors Leader insights aimed at eliminating or modifying work stressors include: • improvements in the physical work environment; • job redesign (see Chapter 6); • changes in workloads and deadlines; • changes in work schedules, more flexible hours, and sabbaticals; and • greater levels of employee participation, particularly in planning changes that affect them. Improvements in job responsibilities and accountabilities can be particularly useful in removing or reducing major role ambiguities and role conflicts—two main sources of severe stress. When diagnosing stressors in the workplace, leaders should be particularly aware that an employee’s lack of control over the tasks they perform heightens stress. The greatest stress occurs when jobs are high in stressors and low in controllability (e.g., police, military in war zones, and disaster recovery work). Thus, work stress may be reduced through (1) involvement of employees in organizational changes that will affect them, (2) work redesign that reduces major uncertainties and increases reasonable control over the pace of work, and (3) improved clarity and understanding of roles. An important way to provide employees with more control and less stress is to give individuals more control over their time. Larry Sanders is chairman and chief executive of Columbus Regional Healthcare System, headquartered in Columbus, Georgia. He is the recipient of a number of awards for his leadership in health-care and civic organizations. Sanders recognizes the importance of giving employees appropriate control over their work and the need for effective communication to effectively manage stress—both his own and subordinates. Sanders comments: My style of management is inclusive, open, and honest. I delegate and then expect those I left in charge to use their resources and capabilities to fulfill the responsibility. I was never micromanaged, and I don’t micromanage. I was allowed to use the full range of my abilities to accomplish tasks, and I expect those who work with me and around me to do the same thing. Micromanagement kills the morale of an organization faster than anything else does.39 Modifying Behaviors Improvements targeted at behaviors and experiences of severe stress include: • team building, • career counseling and other employee assistance programs, • workshops on time management, • workshops on job burnout to help employees understand its nature and symptoms, and • training in relaxation techniques. Dividing stress management programs into these categories doesn’t mean that they are not related. In addition, such programs might overlap in terms of their impact on the three target areas mentioned previously. For example, a workshop dealing with role problems might clarify job descriptions and duties, reducing the magnitude of these potential stressors. At the same time, through greater knowledge and insight into roles and role problems, employees might be able to cope more effectively with this source of stress. Similarly, career counseling might reduce career concerns as a source of stress while improving the ability of employees to cope with career problems. 237 238 Part 2 The Individual in Organizations SW PRODUCTIONS/DIGITAL VISIONS/GETTY IMAGES Wellness Programs ▲ Many organizational wellness programs focus on preventing the leading causes of illness among employees, including sedentary lifestyles and poor nutrition habits. One comprehensive remedy that may be approved by leaders for improving the ability of employees to cope with severe stress is a wellness program—a health management initiative that incorporates the components of disease prevention, medical care, self-care, and health promotion.40 The Wellness Councils of America (WELCOA) is a nonprofit membership organization based in Omaha, Nebraska. It is dedicated to promoting healthy lifestyles. Its primary focus is on building Well Workplaces—organizations dedicated to the health of their employees. The council provides a blueprint to help organizations create programs that help employees make better lifestyle choices and that can have a positive impact on the organization’s profits. To date, more than 700 organizations, such as UPS, SAS, Deloitte Institute, Microsoft, and Berkshire Hathaway, have met the rigid criteria for the Well Workplace award and designation. WELCOA and other wellness programs are driven by, among other factors, the continuous increases in health-care costs paid by employers and employees. The leading causes of illness are often preventable. Targets of wellness programs often include tobacco use, alcohol and substance abuse, sedentary lifestyles, poor nutritional habits, excessive and unnecessary stressors in the workplace, and inadequate employee abilities to cope with stress.41 The scope and features of wellness programs among organizations vary widely. With skyrocketing health insurance premiums for employers and rising copayments for employees, there has been a surge in the adoption of wellness programs.42 The following Change Competency feature provides an overview of Ortho-Clinical Diagnostics’ wellness program, which is one of the Johnson & Johnson family of companies.43 It is headquartered in Raritan, New Jersey, with manufacturing operations in Rochester, New York, and elsewhere. This feature focuses on the Rochester operation. Ortho-Clinical Diagnostics provides solutions for screening, diagnosing, monitoring, and confirming diseases early.44 Change competency Ortho-Clinical Diagnostics’ Wellness Program Ortho-Clinical Diagnostics employs multiple strategies for enhancing employee wellness and vitality. The cornerstone of the company’s program is a health risk assessment and intervention program. All of Ortho-Clinical’s 950 Rochester, New York, employees have completed a health profile detailing their HDL cholesterol, LDL cholesterol, triglycerides, blood sugar, blood pressure, and height, weight, hip, and waist measurements. After completing the profile, employees receive a confidential and personalized health assessment with recommendations and tips for improving their health. By participating in this program, each employee nets a $500 annual health benefit savings. A recent Johnson & Johnson survey indicated that participants have lower medical expenses than those employees who choose not to participate. In addition, they have been able to reduce their cholesterol levels, incidents of hypertension, and cigarette smoking. “The vision of our company is to have the healthiest employees in the world,” says Lorraine Cleary, occupational health nurse and a member of the company’s five-person health and wellness team. “We want to create a culture of complete health, ranging from our nutritious food offerings in the company cafeteria to our outdoor walking trails,” adds Melissa Kraemer, program manager of health and wellness. Chapter 8 Employees have many on-site opportunities to improve their personal health. There is a fitness center that offers 12 weekly group exercise classes. Other activities include a worksite Weight Watchers group, smoking cessation classes, health awareness programs and screenings, and connections with community-based health runs and walks. A stroll through the cafeteria further underscores a commitment to employee health. “Roughly 80 percent of our cafeteria food choices are nutritionally healthy, with minimal processing,” Kraemer explains. “Items include a complete salad bar, wholewheat pizza made with low-fat cheese, and veggie burgers on whole-wheat buns topped with lots of vegetables.” As part of the company’s Eat Complete campaign, one vending machine Workplace Stress and Aggression 239 is dedicated to providing healthy choices, such as yogurt, trail mix, almonds, pita chips, and 100 percent fruit juice. In addition, Ortho-Clinical uses plenty of marketing tools to spread the word about healthy lifestyles. Initiatives include web-based health resources and programs, the Healthy People newsletter, daily e-mail tips on healthy living, and cafeteria table tents with information on topics ranging from injury and illness prevention to work–life programs. Outside the building, employees are treated to a relaxing setting, which includes an extensive walking trail, gazebos, and two serene ponds. Cleary adds: “We fully embrace Johnson & Johnson’s credo. Part of it focuses on our responsibility to employees and their families.” To learn more about Ortho-Clinical Diagnostics, Inc., go to www.orthoclinical.com. Workplace Aggression Workplace aggression includes behaviors that are intended to have the effect of harming a person within or directly related to (e.g., customer, service representative, employee) the organization or the organization itself.45 Aggressive workplace behavior can be grouped into three broad categories: (1) hostility—abusive verbal or symbolic behavior such as ‘‘the silent treatment”; (2) obstructionism—behavior that is designed to hamper the individual’s performance, such as refusing to provide needed resources; and (3) overt aggression—many types of assault, violence, and destruction of property.46 Recent studies of the overall percentage and estimated number of U.S. employees who experience psychological and physical aggression show that it is excessive. In one study, 47 million U.S. employees reported having experienced one or more forms of psychological aggression during the previous 12 months. In addition, 7 million U.S. employees experienced one or more forms of workplace violence during the previous 12 months. In another study, nearly 45 percent of the respondents reported that they had worked for an abusive manager.47 Self-Serving Biases A variety of self-serving biases have been identified for why some employees engage in workplace aggression. Some of these biases include48: • Hostile attribution bias—the assumption that people tend to be motivated by the desire to harm others. This bias is used at times to explain why others behave as they do. Individuals with a strong motive to aggress may even see friendly acts by others as being driven by hidden/hostile agendas that are designed to harm them. This type of attribution enables aggressive persons to rationalize their own hostile behaviors as acts of self-defense intended to head off physical or verbal attack by others. • Potency bias—the assumption that interactions with others are contests to establish dominance versus submissiveness. This bias rationalizes the use of aggression to dominate others as demonstrating strength, bravery, control, and fearlessness. Learning Goal 6. Explain four major types of workplace aggression. 240 Part 2 The Individual in Organizations The failure to act aggressively is seen as weakness, fear, and cowardice. Thus, aggressive individuals see their behaviors as a means of gaining respect from others and feel that to show weakness is to encourage powerful others to take advantage of them. Retribution bias—individuals think that taking revenge (retribution) is more impor• tant than preserving relationships. There is a tendency to see retaliation as a more rational behavior than reconciliation. For example, aggression is seen as justifiable if it is thought to restore respect or exact retributions for a perceived wrong. Retaliation is seen by aggressive individuals as more reasonable than forgiveness, vindication is seen as more reasonable than reconciliation, and obtaining revenge is seen as more reasonable than maintaining a relationship. This bias often underlies justification for aggressions stimulated by wounded pride, reduced selfesteem, and perceived disrespect. • Derogation of target bias—individuals see those they wish to make (or have made) targets of aggressions as evil, immoral, or untrustworthy. This type of influence enables them to see the targets of aggression as deserving of it. Social discounting bias—individuals believe that social customs reflect free will and • the opportunity to satisfy their own needs. They have a disdain for traditional ideals and conventional beliefs and are often cynical and critical of social customs. They show a lack of sensitivity, empathy, and concern for social customs. Socially deviant behaviors intended to harm others are justified by claiming that they allow the aggressive individuals to obtain freedom of expression, relief from the cycles of social customs, and liberation from social relationships. These and other underlying mechanisms for rationalizing aggression may be seen in incidents of bullying, sexual harassment, and workplace violence. In the remainder of this section, we present the core features of four major types of workplace aggression: bullying, sexual harassment, violence, and aggression toward the organization. There are potential overlaps and relationships among these types of workplace aggression. For example, an employee may encounter a variety of bullying behaviors, some of which may escalate into the category of workplace violence and destruction or theft of organizational property. Workplace Bullying Workplace bullying is repeated and persistent negative actions directed toward one or more individuals that involve a power imbalance and create a hostile work environment.49 Unreasonable behavior refers to acts that a reasonable person, when considering all of the circumstances, would see as victimizing, humiliating, undermining, or threatening an employee or group of employees. Bullying often involves a misuse or abuse of power. For the employees subject to it, they can experience difficulties in defending themselves. Bullying cuts across race, religion, and gender. It involves offensive behaviors that a reasonable person would see as creating an intimidating, hostile, or abusive work environment. Normally, bullying must involve repeated incidents and a pattern of behavior. Bullies engage in a variety of behaviors ranging from condescension to rage. Table 8.4 is a questionnaire that presents 24 negative acts that have been identified as components of workplace bullying. This questionnaire enables you to assess whether you have experienced any of these bullying behaviors over the past six months and, if so, how frequently and with what intensity (i.e., the cumulative number of negative acts experienced, which can range from 1 act to a maximum of all 24 acts). In brief, the greater the frequency of a negative act over a six-month period and the greater the number of negative acts, the more severe the degree of bullying.50 Women as well as men may bully others at work. Women bullies target other women an overwhelming 84 percent of the time. Men bullies target women in 69 percent of the cases. Women are most often the targets of bullying.51 Chapter 8 Workplace Stress and Aggression TABLE 8 .4 Negative Acts Associated with Workplace Bullying Instructions: Indicate how often you may have experienced each of the negative acts associated with workplace bullying during the past six months. Use the following scale and record your response next to each statement below: Never Occasionally (less than monthly) 1 0 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. Monthly Weekly Daily 2 3 4 Had information withheld that affected your performance. Been exposed to an unmanageable workload. Ordered to do work below your level of competence. Given tasks with unreasonable/impossible targets/deadlines. Had your opinions and views ignored. Had your work excessively monitored. Reminded repeatedly of your errors or mistakes. Humiliated or ridiculed in connection with your work. Had gossip and rumors spread about you. Had insulting/offensive remarks made about you. Been ignored, excluded, or isolated from others. Received hints or signals from others that you should quit your job. Been intimidated with threatening behavior. Experienced persistent criticism of your work and effort. Been ignored or faced hostile reactions when you approached the person. Had key tasks removed, replaced with trivial unpleasant tasks. Had false allegations made against you. Subjected to excessive teasing and sarcasm. Been shouted at or targeted with spontaneous anger (or rage). Pressured into not claiming something to which you were entitled. Been subjected to demeaning practical jokes. Received unwanted sexual attention. Received offensive remarks or behavior related to your race or ethnicity. Experienced threats of violence or abused/attacked. Scoring: Total the number of points assigned. In general, the greater the frequency (never to daily) and the greater the intensity (none to 24 acts), the greater the degree of bullying experienced. Based on your responses to this instrument, how do you perceive and interpret the degree of bullying (if any) experienced by you? Source: Adapted from Einarsen, S., Hoel, H., Zapf, D., and Cooper, C. L. The concept of bullying at work. In Einarsen, S., Hoel, H., Zapf, D., and Cooper, C. L. (Eds.). Bullying and Emotional Abuse in the Workplace: International Perspectives in Research and Practice. London: Taylor & Francis, 2003, 3–30; Lutgen-Sandvik, P., Tracy, S. J., and Alberts, J. K. Burned by bullying in the American workplace. Journal of Management Studies, 2007, 44, 837–862. Bullying harms the health of the individual subjected to it. Health concerns from bullying need to be distinguished from routine office politics, teasing, incivilities, and somewhat off-color stories/jokes. All of the effects of stress identified previously may be experienced as a result of bullying. In addition, individuals who report severe forms of bullying identify experiencing the following major symptoms: • General anxiety disorder—evidenced by anxiety, excessive worry, disruptive sleep, stress headaches, and racing heart rate. • Clinical depression—evidenced by loss of concentration, disruptive sleep, obsession over details at work, exhaustion (leading to an inability to function), and diagnosed depression. 241 242 Part 2 The Individual in Organizations • Post-traumatic stress disorder—evidenced by feeling edgy or irritable and constantly on guard, having recurrent nightmares and flashbacks, and needing to avoid the feelings or thoughts that remind the bullied person of the trauma.52 In addition to the potential terrible effects of bullying on the individual, the organization has much at stake in preventing or dealing with bullying in a direct way. A variety of organizational effects have been associated with bullying. These include (1) high absenteeism resulting from time taken off by the bullied employees, (2) reduced productivity among bullied workers, (3) stress-related illnesses that increase healthcare costs to the organization, (4) reduced customer service due to bullied employees feeling less loyalty to the organization because it is not protecting them from bullying, and (5) increased employee turnover—82 percent of people targeted by a bully quit.53 Insights for Leaders Many insights have been suggested to address bullying in the workplace. As a start, leaders should have an anti-bullying workplace aggression policy that defines expectations for interpersonal relationships. Employees should understand what is and is not acceptable behavior in the workplace. This will serve as one step toward creating a culture in which people treat each other with courtesy and respect. Leaders need to create a culture of respect by taking corrective action against those engaged in bullying behaviors. Increasingly, employers are no longer dismissing bullying as simply a socially acceptable side effect of office politics. In addition to strong sexual harassment policies, a number of firms are developing policies that address bullying. A few examples include American Express, Burger King, and JCPenney. The failure of leaders to address bullying has resulted in successful legal action against those firms.54 In addition to the insights reviewed, leaders can do the following: (1) Speak directly to the bully. Tell the individual that you find his or her behavior unacceptable and that it needs to stop. Often this is all that is needed. (2) In some cases, the bullying behaviors are not seen by others. Thus, tell a friend or work colleague. You may soon learn that you are not the only one who has been subject to the person’s bullying. (3) Keep a diary of the specific behaviors and incidents of bullying and when each occurred. Many of the incidents in isolation may seem minor, but when put together, they can establish a serious pattern over time. (4) Discuss the experience of bullying with the bully. If your manager is the person who is doing the bullying, you may need to discuss the matter with a person in the human resources department. (5) If these initial steps are not effective, it may be necessary to file a formal complaint, consistent with the organization’s policies.55 There is no assurance that these steps will be effective. Unfortunately, too often employees have found it necessary to resign from their positions or seek a transfer to a different department to remove themselves from the bullying activity. A special type of bullying in the workforce is mobbing—the ganging up by coworkers, subordinates, or superiors to force someone out of the workplace through rumor, intimidation, humiliation, discrediting, and/or isolation. As with the traditional form of bullying, mobbing may result in high turnover, low morale, decreased productivity, increased absenteeism, and a loss of key individuals. It may eventually lead to diminished teamwork, trust, and a toxic workplace culture. It is estimated that about 5 percent of employees are targets of mobbing sometime during their working lives.56 The prime targets of mobbers are often high achievers, enthusiastic employees, those of high integrity and ethical standards, those who don’t belong to the “in-group,” women with family responsibilities, and even those with different religious or cultural orientations.57 Mobbing is much more difficult for an employee to deal with than bullying. Why? The employee is not simply dealing with the actions of another, but rather that of many of his or her coworkers and/or superiors. While training a work team, one anonymous employee reported about witnessing mobbing: “I noticed a young man, relatively new to the company, who sat alone. Whenever he Chapter 8 Workplace Stress and Aggression spoke, someone hurled a wisecrack his way. If he entered or left the room, jibes from his ‘teammates’ followed. At a break, I asked if this harassment was typical. ‘Oh,’ he answered, ‘it’s been like that since I got here. It’s not everybody, just four or five guys. I guess I have to put up with it because I’m new.’ I offered to address the obnoxious behavior or get help from his manager, but he refused. ‘Don’t,’ he pleaded. ‘That’ll only make it worse. I just try to put up with it.’ ”58 The employee subject to mobbing may find that colleagues no longer meet with her or him. Management may not provide the possibility to communicate, the employee may be isolated in a work area, perhaps the employee is given meaningless work assignments, or the employee may be repeatedly left out of the information loop critical to his or her work. Taken together and repeated over time, these kinds of actions may be devastating for the employee. In too many cases, the only recourse for the employee is to seek a transfer within the organization or resign the position.59 Sexual Harassment Sexual harassment is one of the many categories of harassment that may occur in the workplace. As discussed in Chapter 2, harassment refers to verbal or physical conduct that denigrates or shows hostility toward an individual because of that person’s race, skin color, religion, gender, national origin, age, or disability. Harassment can also occur if conduct is directed toward a person’s relatives, friends, or associates.60 Please recall from Chapter 2 that harassment does one or more of the following: (1) has the purpose or effect of creating an intimidating, hostile, or offensive work environment; (2) Has the purpose or effect of unreasonably interfering with an individual’s work performance; or (3) otherwise adversely affects an individual’s employment opportunities. In Chapter 2, we stated that sexual harassment generally refers to unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.61 Sexual harassment consists of two types of prohibited conduct in the United States: (1) quid pro quo—in which submission to harassment is used as the basis for employment decisions, and (2) hostile environment—in which harassment creates an offensive working environment. Please see Chapter 2 for a discussion of behaviors that constitute sexual harassment. In Chapter 2, we also stated that any harassment policy, including one on sexual harassment, should contain (1) a definition of the harassment, (2) a harassment prohibition statement, (3) a description of the organization’s complaint procedure, (4) a description of disciplinary measures for such harassment, and (5) a statement of protection against retaliation.62 Stopping Sexual Harassment A few highlights of the insights for stopping sexual harassment, include63: • Tell the person that his or her behavior is offensive. Firmly refuse all invitations. If the harassment doesn’t end promptly, write a letter instructing the harasser to stop and keep a copy. • As soon as the employee experiences the sexual harassment, she or he should start writing it down, including dates, places, times, and possible witnesses to what happened. If possible, coworkers should be asked to write down what they saw or heard, especially if the same thing is happening to them. Remember that others may (and probably will) read this written record at some point. It is a good idea for the employee to keep a duplicate record at home or in some other safe place. The employee should not keep the only record at work. • The employee should tell the manager, human resources representative, or some other department or person within the organization who has the power to stop 243 244 Part 2 The Individual in Organizations the harassment. If possible, tell them in writing. Keep a copy of any written complaint made to the employer. It is very important that the employee report the harassment because the employer must know or have reason to know about the harassment in order to be legally responsible for a coworker’s, client’s, or customer’s actions. Even if the harasser was the manager, the employee may need to show that the harassment was reported to the employer or be able to give a good reason why it wasn’t. When the employee reports the sexual harassment to the employer, it needs to be • done in writing. Describe the problem and how the employee wants it fixed. This creates a written record of when the employee complained and what happened in response to it. Keep copies of everything sent and received from the employer. • Most employers have policies for dealing with sexual harassment complaints. The employee must attempt to resolve the problem through this process. It is important to follow the employer’s procedures. • An employee in the United States has the right to file a complaint with the Equal Employment Opportunity Commission and/or a state agency. As a last resort, a lawsuit in federal or state court may be filed. Sexual harassment continues to be a serious form of workplace aggression because it may lead to one or more of the discussed reactions outlined for bullying. As with bullying, leaders have a responsibility to do everything in their power to prevent sexual harassment from occurring. When it does occur, it needs to be dealt with quickly and firmly. Workplace Violence Workplace violence is any act in which a person is abused, threatened, intimidated, or assaulted and that represents an explicit or implicit challenge to the person’s safety, wellbeing, or health at work.64 A number of behaviors are considered to be forms of workplace violence. These include murder, rape, robbery, wounding, battering, kicking, throwing objects, biting, hitting, pushing, kicking, spitting, scratching, squeezing or pinching, stalking, intimidation, threats, leaving offensive messages, rude gestures, swearing, harassment (including sexual, racial, and other), intense bullying or mobbing, sabotage, theft, property damage, and arson.65 It is generally recognized that numerous incidents of workplace violence are never officially reported or, if so, never formally recorded.66 Harm Model As noted previously, there are potential overlaps in the types of aggressive workplace behaviors that are considered to constitute bullying, sexual harassment, and workplace violence. These relationships and overlaps are suggested in the harm model of aggression—a continuum that ranges from harassment to aggression to rage to mayhem.67 The types of conduct related to each level of aggressive or threatening behavior occur on an ascending scale, as follows: • Harassment. The first level of behavior on the continuum is harassment. This behavior may or may not cause harm or discomfort to the employee. But, harassment is generally considered unacceptable in the workplace. Examples of harassment include acting in a condescending way to a customer, slamming an office door, glaring at a colleague, or playing frequent practical and cruel jokes. • Aggression. Aggressive behaviors are those that cause harm to or discomfort for another employee or for the organization. Such behaviors include shouting at a customer, spreading damaging rumors about a coworker, or damaging someone’s personal belongings. Clearly, all of these behaviors are inappropriate for the workplace. Chapter 8 • • Workplace Stress and Aggression Rage. The third level on the continuum is rage. Rage is seen through intense behaviors that often cause fear in other employees and which may result in physical or emotional harm to people or damage to property. Rage typically makes the inappropriate behaviors physical and visible. Examples of rage can range from pushing a customer to sabotaging a coworker’s presentation or leaving hate statements on someone’s desk. Mayhem. The final stage is mayhem. This stage represents physical violence against employees or customers or the violent destruction of property. Activity in this category can range from punching a customer or ransacking an office to physically punching a coworker or superior to destroying a facility to shooting a coworker or superior to death. Warning Signs Employees who engage in workplace violence at the rage and mayhem levels frequently exhibit clear observable warning signs. These warning signs include the following: (1) violent and threatening behavior—including hostility and approval of the use of violence; (2) “strange” behavior—becoming reclusive, deteriorating personal appearance/ hygiene, and erratic behavior; (3) performance problems—including problems with attendance or tardiness; (4) interpersonal problems—including numerous conflicts, hypersensitivity to comments, and expressions of resentment; and (5) “at the end of his (or her) rope”—indicators of impending suicide, the expression of an unspecified plan to “solve all problems” and the like, and statements of access to and familiarity with weapons.68 Triggering Events There are identifiable sets of triggering events. The triggering event is seen to the violence-prone individual as the last straw that creates a mind-set of no way out or no more options. The most common sets of triggering events that lead to rage or mayhem are (1) being fired, laid off, or suspended or passed over for promotion; (2) disciplinary action, poor performance review, severe criticism from one’s superior or coworkers; (3) bank or court action such as foreclosure, restraining orders, or custody hearings; (4) a benchmark date—the anniversary of the employee at the organization, chronological age, a date of some horrendous event (such as September 11, 2001, or the aftermath of Hurricanes Katrina, Rita, and Ike); or (5) failed or spurned romance or a personal crisis such as separation, divorce, or death in the family.69 These types of triggering events are indicators that allow employers to anticipate an employee who exhibits these warning signs for engaging in rage or mayhem. Insights for Leaders There are a number of insights for leaders to help prevent workplace violence. During the hiring process, careful interviewing and background checks are essential. For the existing workforce, leaders’ application of the foundation competencies developed throughout this book will minimize the conditions that trigger incidents of workplace violence. Employee training related to workplace violence is increasingly seen as essential. When the early warning signs of the potential for an employee to engage in workplace violence occur, the appropriate use of counseling, employee assistance program referrals, sound security measures, and preventive disciplinary actions will be helpful. A zero-tolerance violence policy that is fairly enforced and consistently communicated is a foundation guideline for minimizing and taking corrective action with respect to workplace violence.70 First, a formal policy sends a strong signal to employees that workplace violence will not be tolerated. Second, the severity of the penalty for violent behavior should further reinforce the message. Third, a policy lets employees know exactly what conduct is prohibited. 245 246 Part 2 The Individual in Organizations Coping with violence among employees within the workplace is one challenge; another is coping with intimate partner violence that enters the workplace directly (the partner works in the same organization) or indirectly (the partner is not a member of the organization). Intimate partner violence refers to the rage committed by a spouse, ex-spouse, or current or former boyfriend/girlfriend.71 Typically, it is committed by a male. This violence is not only traumatic for the victim, but difficult for leaders and the victim’s peers in knowing how to respond—or if they should even attempt to respond. Although few in number, an increasing number of organizations are putting in place programs and policies to assist employees who are victims of intimate partner violence. A few of these organizations include American Express, Liz Claiborne (an early leader), CIGNA, and Kaiser Permanente. The Corporate Alliance to End Partner Violence provides information on intimate partner violence as related to the workplace.72 In a recent study, only 13 percent of executives say organizations should provide formal policies and practices to address domestic violence. In contrast, 9 out of 10 employees in the study think their employers should assist in addressing the problem. As suggested in the following Diversity Competency, the best efforts of leaders and peers are not always sufficient in helping the employee who is a victim of intimate partner violence.73 The setting is the Darwin Realty & Development Corporation, headquartered in suburban Chicago. It is a privately held real estate brokerage, property management, investment, and development firm.74 The president and peers of Cindy Bischof did all that was possible. Diversity competency Darwin Realty Cindy Bischof was not the kind of woman who would normally let a boyfriend get in the way of her career. Motivated and productive, Bischof was an admired partner at Darwin Realty. She was a role model to the firm’s young women, a mentor to junior brokers, a 43-year-old high achiever. Her peers voted her Industrial Broker of the Year. Bischof was neither submissive nor easily intimidated—which is why what happened to her on March 7, 2008, is all the more shocking. For nearly a year, Bischof had been trying to untangle herself from a soured five-year relationship with an out-of-work salesman named Michael Giroux. After their breakup in May 2007, the handsome and charming Giroux turned strange and dangerous. The day of the breakup, Bischof changed the locks on her house. That night she went to stay with her parents. Giroux smashed the back windows of her house, broke in, and threw paint all over her furniture, rugs, and appliances. Giroux began calling Bischof incessantly on her cell phone. He stalked her at her house, at her parent’s house, even on the golf course. Bischof’s torment became Darwin Realty’s nightmare as the firm’s leaders and peers rallied around her. They helped clean up the damage to her house, which cost her $70,000, according to police reports. The head of Bischof’s department installed a camouflaged infrared deer hunting camera in the bushes of her backyard to take pictures of her deck at night. In August 2007, the camera caught Giroux there with a rope, making a noose. Darwin’s president, George Cibula, arranged for Bischof to move into a rental property 30 miles away in Plainfield so that Giroux couldn’t find her. Cibula hired security guards for the company Christmas party. Sometimes Bischof’s partners walked her out to her car at night, just in case. But Bischof was alone that Friday afternoon in March 2008 as she left her office and headed to her car. She was looking forward to joining her parents at her condo in Estero, Florida. Minutes later, Brian Liston, a Darwin partner working in a corner office, heard four gunshots behind him. He turned and there, outside his office window, Chapter 8 lay Bischof, face down on the parking-lot pavement. Giroux, wearing a baseball cap and a fake mustache, had been lying in wait at the tire store next door. He shot and fatally wounded her before shooting himself in the head. While police spent hours investigating the obvious, employees huddled in the hallways and conference rooms as shock turned to horror and then to unbearable grief. “It’s still not over,” Cibula said months later, choking up. “All you can do is endure the shock of it.” As the top executive, Cibula doesn’t know what he could have done differently. He couldn’t shield his staff from the trauma. No amount of security would Workplace Stress and Aggression 247 have stopped so determined a killer, he believes. “Cindy did not want to bring her personal problems to work. But we butted our way in anyway because she was our friend and colleague.” Cathy Radek, one of Bischof’s colleagues, recalls: “She was petrified, and we were petrified for her. Bischof was doing everything she could to switch up her routines. I made sure she called me multiple times a day. Check-ins were required.” Radek and Darwin president Cibula attended every court hearing—to give moral support to Bischof and send Giroux a message to leave her alone. “It was an emotional roller coaster for everybody,” Radek states. To learn more about Darwin Realty, go to www.darwinrealty.com. Employee attitudes, demographics, and the efforts of an increasing number of leaders are converging to bring this issue out in the open. With so many women in the workforce, and with e-mail, text messaging, and cell phones connecting them to the office around the clock, intimate partner violence comes to work whether executives like it or not. Employees are well aware of this. Aggression toward the Organization Our discussion has focused on three of the types of workplace aggression as they impact the employee or groups of employees. An employee who feels unjustly treated, whether for a good cause or self-serving rationalization, may also engage in aggressive behaviors against the organization. At times, the aggression toward the organization is seen as a way of retaliating against the employee’s manager or higher levels of leadership. Direct aggression toward management may be seen as resulting in reprisals, such as disciplinary actions or dismissal. The employee might ignore customers and their requests or be rude to them, but not to the point that the customers are likely to complain to higher management. Or, the employee might say negative things as a way of blaming the customers’ problems on higher management.75 As suggested previously, other forms of aggression against the organization may include (1) theft of equipment, supplies, or money; (2) damaging or destroying equipment and facilities; and (3) slacking off whenever possible and withholding ideas for improvements. Chapter Summary Stress is the excitement, feeling of anxiety, and/or physical tension that occurs when the demands placed on individuals exceed their ability to cope. The stories of stress are often about negative stress. An individual’s general biological responses to severe stressors prepare them to fight or flee—behaviors generally inappropriate in the workplace. Many factors determine how employees experience severe work stress, including their perception of the situation, past experiences, the presence or absence of social support, and a variety of individual differences. 1. Explain the concept of and influences on creating stress. 248 Part 2 The Individual in Organizations 2. Identify the primary sources of work-related stressors. 3. State the potential impacts of severe stress on health, performance, and job burnout. 4. Describe how individual differences influence reactions to stressful situations. 5. Apply individual and leader insights to the management of workplace stress. 6. Explain four major types of workplace aggression. Organizational sources of severe stress at work often include (1) workload, (2) job conditions, (3) role conflict and ambiguity, (4) career development, (5) interpersonal relations, (6) conflict between work and life roles, and (7) workplace aggression, especially bullying, sexual harassment, and violence. In addition, significant changes or other events in an individual’s personal life may also be sources of severe stress. Severe stress may affect an individual physiologically, emotionally, and behaviorally. Severe stress is linked to various health problems. An arch-shaped relationship exists between stress and performance. In other words, an optimal level of stress probably exists for any particular task. Less or more stress than that level may lead to reduced performance. Job burnout is a major result of unrelieved and intense job-related stress. Several personality characteristics are related to differences in how individuals cope with severe stress. Individuals with a Type A personality are more prone to stress and have an increased chance of experiencing physical ailments due to it. Some dimensions of the Type A personality, such as hostility, are particularly important in terms of stress-related illness. In contrast, the collection of personality traits known as hardiness seems to reduce the effects of severe stress. Stress is a real issue for both individuals and organizations. Fortunately, various insights can help leaders and employees manage stress in the workplace. These insights often focus on identifying and removing workplace stressors as well as helping employees cope with stress. Workplace aggression includes a variety of behaviors: psychological acts such as shouting or intimidating remarks, physical assault, and destruction or theft of property. Four of the more common types of workplace aggression include bullying, sexual harassment, violence, and aggression toward the organization itself. There may be overlaps in the behaviors associated with each type, as suggested by the harm model. This model represents a continuum of levels of violence from harassment to aggression to rage to mayhem. Mayhem may include murder or the destruction of organizational property. A variety of guidelines for minimizing and taking corrective action with respect to bullying, sexual harassment, and workplace violence were reviewed. Key Terms and Concepts Depersonalization, 230 Derogation of target bias, 240 Fight-or-flight response, 221 Hardiness, 233 Hardy personality, 233 Harm model of aggression, 244 Hostile attribution bias, 239 Intimate partner violence, 246 Job burnout, 230 Life stressors, 227 Mobbing, 242 Post-traumatic stress disorder, 229 Potency bias, 239 Retribution bias, 240 Role ambiguity, 224 Role conflict, 224 Role overload, 223 Social discounting bias, 240 Stress, 221 Stress management, 235 Type A personality, 232 Type B personality, 232 Wellness program, 238 Workplace aggression, 239 Workplace bullying, 240 Workplace incivility, 225 Workplace violence, 244 Chapter 8 Workplace Stress and Aggression 249 Discussion Questions 1. 2. 3. 4. 5. 6. Go to www.howtolayoffemployees.com. What suggestions are presented that help to reduce the stresses of being laid off ? What are the ethical implications for leaders who ignore the impacts of severe workplace stress on their employees? Assume a leader is lacking in the diversity competency. How does this deficiency link to the severe workplace stress experienced by some or all employees? Give an example of your use of the fight-or-flight response. In that situation, all things considered, was your response effective or ineffective? Have you experienced or observed workplace incivility? If yes, what impacts, if any, did it have on you or others? Explain. Review the Self-Competency feature entitled “Chesley Sullenberger III, Captain of US Airways Flight 1549.” Based on the descriptions of Sullenberger, what characteristics of the hardy personality are illustrated? Tie the specific comments about him to each of the characteristics identified. 7. Review the Change Competency feature entitled “Ortho-Clinical Diagnostics’ Wellness Program.” How does this program help reduce work stressors and modify behaviors? 8. Identify and list some of the stressors in a job that you have had. Which were the most difficult to deal with? Why? 9. How would others who know you assess you in comparison to (a) the Type A personality, (b) the Type B personality, and (c) the hardy personality? Explain. 10. Have you experienced or witnessed workplace bullying? If yes, did the organization’s leaders deal with it effectively? Explain. 11. Have you experienced or witnessed workplace violence? If yes, did the organization’s leaders deal with it effectively? Explain. Experiential Exercise and Case Experiential Exercise: Self Competency Work-Related Stress Inventory76 Instructions _____ 6. The following statements ask about the availability of various individuals to provide support when you experience stressful problems at work or school. Please respond to each item by recording a number from the rating scale below next to each statement. Rate the support from your leader, your coworkers, and your partner/family/friends in helping you with stressful issues and events. How much can you rely on others . . . Instrumental Support _____ 7. . . . to give you practical assistance when you experience work-related problems? _____ 8. . . . to spend time helping you resolve your workrelated problems? _____ 9. . . . to help when things get tough at work? Not at all 1 A little 2 Somewhat 3 Much 4 Totally 5 Emotional Support _____ 1. . . . to help you feel better when you experience work-related problems? _____ 2. . . . to listen to you when you need to talk about work-related problems? _____ 3. . . . to be sympathetic and understanding about your work-related problems? Informational Support _____ 4. . . . to suggest ways to find out more about a work situation that is causing you problems? _____ 5. . . . to share their experiences of a work problem similar to yours? . . . to provide information that helps to clarify your work-related problems? Appraisal Support _____ 10. . . . to reassure you about your ability to deal with your work-related problems? _____ 11. . . . to acknowledge your efforts to resolve your work-related problems? _____ 12. . . . to help you evaluate your attitudes and feelings about your work-related problems? Scoring • • • • Emotional support from others: Sum the points for items 1–3 _____. Informational support from others: Sum the points for items 4–6 _____. Instrumental support from others: Sum the points for items 7–9 _____. Appraisal support from others: Sum the totals for items 10–12 _____. 250 Part 2 The Individual in Organizations Interpretation • • • • 12 to15 points suggest you have much support for that dimension. 7 to 11 points suggest you have some support for that dimension. 3 to 6 points suggest you are on your own for that dimension. Overall: Sum the points for all 12 items. Total scores of 48 to 60 points suggest a pattern of strong support. Total scores of 12 to 24 points suggest a pattern of feeling isolated and alone in dealing with problems that create work-related stress. Total scores of 25–47 suggest a pattern of some or mixed support. Questions 1. Do your scores suggest that you need to take action to lower your stress level? If “yes,” what actions do you think would be most effective? 2. Of the seven competencies discussed in this book (communication, self, diversity, etc.), which three are likely to be most effective and important to you in managing your stress level? Explain. Case: Ethics Competency Coleen Colombo and Colleagues Resist Mortgage Fraud 77 Coleen Colombo joined the Concord (California) branch of BNC in 2003. The small office, next to a Mercedes–Benz dealership and a run-down Kmart, was part of a regional group that funded some $1.2 billion worth of loans each month. Colombo initially thrived in her job as a senior underwriter. In a performance review, she received a top rating of “exceeds expectations,” according to a wrongful termination and harassment suit filed in California Superior Court on behalf of Colombo and five other female employees. The environment turned hostile in 2005 and thereafter, the suit says. At that time, one fellow employee, a male wholesaler, began bringing Colombo questionable loans with incorrect salaries, occupations, and home values, she says. In one instance, she claims in the suit, the wholesaler “tried to bribe (Colombo) to allow a loan with fraudulent information to go through.” The bribes, known as spiffs, were common at the BNC branch, says Sylvia Vega-Sutfin, a former wholesaler who left the firm in 2005. The mother of four, who says she made $16,000 a month during the boom, says that some underwriters demanded spiffs of $1,000 for the first 10 loans and $2,500 for the next 20 loans, whether they approved the mortgages or not. When she refused to pay them, Vega-Sutfin says, her loan files started to go missing and the size of her commission checks plummeted. Her bosses “said they would make an example of me to others: ‘If you complain, this is what will happen,’” she says. Colombo says in her lawsuit that she e-mailed the regional vice president for operations to report the wholesaler who tried to bribe her. She claims the vice president brushed off her complaints in a meeting. Colombo “left the office in tears,” the suit says. After she returned from a short leave of absence, the branch manager told her a coworker “wanted her terminated for making the complaints,” Colombo claims. Meanwhile, the wholesaler who tried to bribe Colombo started sexually harassing her, according to the suit. The male colleague made her feel “uncomfortable and fearful” by “intentionally rubbing his body against hers.” Colombo resigned from BNC in 2005. “You would have thought he was the pimp and we were his prostitutes,” says Linda Weekes, another underwriter who is part of the suit. “It felt like a dirty place to work.” The case has been on hold since BNC’s owner, Lehman Brothers, filed for bankruptcy on September 15, 2008. “We dispute the allegations made by these former employees and will be contesting them on the merits in the pending litigation,” says a Lehman spokesman. The world came crashing down for wholesalers when subprime loans started going bad. Wall Street quickly reined in its mortgage factories, tightening lending standards, pulling credit lines, and forcing lenders to buy back the same risky loans it once consumed. For the thousands of wholesalers swept up in the excitement and excess of a manic market, it was time to find a new job. Questions 1. Is the “fight-or-flight” response evident in this case? Explain. 2. What influences on the stress experience appear to be present? 3. What were the primary work-related stressors for Coleen Colombo and Sylvia Vega-Sutfin? Explain. 4. Do you think the lawsuit was warranted? Explain. 5. What defense mechanisms used by individuals to justify aggressive behaviors are evident? Explain. part 3 Leadership and Team Behaviors chapter Interpersonal Communication in Organizations 9 Leadership Effectiveness: Foundations 10 Leadership Effectiveness: New Perspectives 11 Developing and Leading Teams 12 Managing Conflict and Negotiating Effectively 13 251 chapter 9 Interpersonal Communication in Organizations Learning Goals Learning Content After studying this chapter, you should be able to: Learning from Experience Julia Stewart, Chairman and CEO of DineEquity 1 Describe the core elements of interpersonal communication. 2 Explain the factors that foster ethical communications. 3 Diagnose nonverbal communication behaviors. 4 Understand the importance of cultural and nonverbal barriers to communication. 5 Discuss the role of communication networks. Elements of Interpersonal Communication Ethical Interpersonal Communications Change Competency Susan Powers, Chief Information Officer, Travelport GDS Nonverbal Communication Communication Competency Poor Nonverbal Signals Prior to Layoffs Intercultural Communication Across Cultures Competency Tahir Ayub, Partner, PwC Interpersonal Communication Networks Change Competency Michael Ward’s Reflections on CSX’s One Plan Redesign Experiential Exercise and Case Experiential Exercise: Communication Competency Communication Inventory Case: Communication Competency Xographics Learning from Experience Julia Stewart, Chairman and CEO of DineEquity To learn more about DineEquity, go to www.dineequity.com. She often finds herself saying, “I thought of something in the shower. The other day my general counsel said, ‘You must have the biggest water bill of anybody here.’ I have a pad I keep in my bathroom, and when I get an idea, I just start writing. I bring these little pieces of paper into the office. Some of the strategies involved with the Applebee’s [deal] came from shower notes.” As one of her vice presidents comments, “She’s big on us all reading books. Recently, everybody in the company read The Oz Principle. The Oz Principle is that every human being goes below the line and says something catty or inappropriate about someone. It’s human nature. And it’s okay, but you can’t just stay there. You’ve got to get back up above the line.” Stewart nurtures relationships with franchisees very carefully. The most important part of a relationship is communication. “I constantly talk with franchisees making certain that they FRANK POLICH/REUTERS/LANDOV Julia Stewart serves as chairman and chief executive officer of DineEquity, Inc. DineEquity franchises and operates a small number of restaurants under the Applebee’s Neighborhood Grill & Bar and IHOP brands. A franchise is a system that enables a franchisor (DineEquity) to arrange for a franchisee to handle specific products and services under mutually agreed-on conditions. In 2007, Stewart led DineEquity’s acquisition of Applebee’s, which brought together two restaurant brands and created the largest full-service restaurant company in the world with more than 3,300 locations, 99 percent of which are franchised. DineEquity has approximately 200 franchise groups, each of which operates multiple restaurants. DineEquity is headquartered in Glendale, California. Stewart is a recipient of major industry awards and serves on various association and charity boards. She says “I can tell a lot about people by the way they act toward the food server. So I typically never hire anyone without going out to eat with them. It’s a great way to learn about a person. If you have a conversation with me and never acknowledge the food server, you are being disrespectful and will never work for me.” Stewart uses e-mail, but voice mail works best for her. She comments: “I feel strongly about returning people’s phone calls and treating them with dignity. Everybody deserves a return phone call. Employees have to return franchisee phone calls within 24 hours. That’s standard procedure.” She finds e-mail sort of stale and impersonal. Stewart doesn’t allow BlackBerrys to be used in meetings. “We want people’s undivided attention to each other, and I can’t find anything more disruptive than those,” she says. 254 Part 3 Leadership and Team Behaviors understand our vision, they understand where leaders want to take the brand, they’re supportive; there’s collaboration, there’s buy-in. This is an ongoing process.” She doesn’t think you ever stop that. “At the core of continuing that re-energizing with Applebee’s franchisees is the communication and ongoing conversations with them, because they have to buy in. They’re doing a lot of the heavy lifting. We’re certainly doing the strategic part, but they’re doing the execution day in and day out. So it’s making sure they feel comfortable.” Michael Smith, a restaurant analyst, comments: “I’ve been impressed with how she came up with a plan to execute franchisees’ desires, and she’s done a good job of executing. You’d have to give her an A for that. At one time, I saw IHOP as being in a box that was going to be hard to get out of, and she got them out of it.” Stewart is engaged in leading the same transformation at Applebee’s.1 In the Learning from Experience feature, Julia Stewart demonstrates the importance of effective interpersonal communications for achieving organizational effectiveness. Her commitment to ethical interpersonal communications is evident through her practice of using four factors that foster ethical dialogues: communication openness, constructive feedback, appropriate self-disclosure, and active listening. ( These factors are discussed in detail later in the chapter.) Recall from Chapter 1 that the communication competency involves the knowledge, skills, and abilities to use all the modes of transmitting, understanding, and receiving ideas, thoughts, and feelings— verbal, listening, nonverbal, and written—for accurately transferring and exchanging information. This chapter focuses primarily on providing a path for individuals to enhance their communication competency with an emphasis on interpersonal communication. Interpersonal communication refers to a limited number of people who (1) are usually in proximity to each other, (2) use many sensory channels, and (3) are able to provide immediate feedback.2 First, we discuss the process, types, and patterns of verbal, nonverbal, and other forms of communication used by employees on the job. Second, we discuss ethical communications in organizations. Third, we examine the nature and importance of nonverbal communication in interpersonal communication. Fourth, we discuss the importance of cultural context and differences in communications. Fifth, we review the role of communication networks in organizations, including the impacts of e-mail and instant messaging technologies. Learning Goal 1. Describe the core elements of interpersonal communication. Elements of Interpersonal Communication For accurate interpersonal communication to take place, the sender’s message must be the same as that interpreted by the receiver. Recall Julia Stewart’s views: “I constantly talk with franchisees making certain that they understand our vision, they understand where leaders want to take the brand, they’re supportive; there’s collaboration, there’s buy-in. This is an ongoing process.” Figure 9.1 presents the elements of interpersonal communication involving only two people. This process is not easy, and by considering its components, you can readily see that it becomes increasingly complex as more people participate. Sender and Receiver Exchanges between people are an element of interpersonal communication. Labeling one person as the sender and the other as the receiver is arbitrary. These roles shift back and forth, depending on where the individuals are in the process. When the Chapter 9 Interpersonal Communication in Organizations FIGURE 9.1 Elements of Interpersonal Communication Sender Start Channels (Messages) Receiver Transmitters Receptors Encoding Decoding Sender/ Meaning Potential Barriers Receiver/ Meaning Decoding Encoding Receptors Transmitters Receiver Channels (Messages) Sender (Feedback) receiver responds to the sender, the original receiver becomes the sender and the initiating sender becomes the receiver. Transmitters and Receptors Transmitters (used by the sender) and receptors (used by the receiver) are the means available for sending and receiving messages. They usually involve one or more of the senses: seeing, hearing, touching, smelling, and tasting. Transmission can take place both verbally and nonverbally. Once transmission begins, the communication process moves beyond the direct control of the sender. A message that has been transmitted cannot be brought back. How many times have you thought to yourself “I wish I hadn’t said that” or “Why did I hit send?” Messages and Channels Messages include the sent data and the coded symbols that give particular meaning to the data. By using both verbal and nonverbal symbols, the sender tries to ensure that messages are interpreted by the receiver as the sender intended. To understand the difference between an original meaning and a received message, think about an occasion when you tried to convey inner thoughts and feelings of happiness, rage, or fear to another person. Did you find it difficult or impossible to transmit your true “inner meaning”? The greater the difference between the interpreted meaning and the original message, the poorer will be the communication. Words and nonverbal symbols have no meaning by themselves. Their meaning is created by the sender, the receiver, and the situation or context. Recall the importance of context and nonverbal communications to Stewart when interviewing potential employees. She states, “I can tell a lot about people by the way they act toward the food server. So I typically never hire anyone without going out to eat with them. It’s a great way to learn about a person. If you have a complete conversation with me and never acknowledge the food server, 255 256 Part 3 Leadership and Team Behaviors you are being disrespectful and will never work for me.” In our discussion later in this chapter of potential interpersonal barriers, we examine why messages aren’t always interpreted as they were meant to be.3 Channels are the means by which messages travel from sender to receiver. Examples of channels would be the “air” during person-to-person conversations, e-mail via the Internet, and the telephone. In the Learning from Experience feature, Stewart indicated the importance of face-to-face communication with both employees and franchisees. Recall Stewart’s feelings about e-mail: She finds it stale and impersonal and doesn’t allow BlackBerrys to be used in meetings. “We want people’s undivided attention to each other, and I can’t find anything more disruptive than those,” she says. Media Richness Media richness is the capacity of a communication approach to transmit cues and provide feedback.4 As suggested in Figure 9.2, the richness of each medium is a blend of several factors. One factor is the speed of personalized feedback provided through the medium. It is shown on the vertical axis as varying from slow to fast. A second factor is the variety of cues and language provided through the medium. It is shown on the horizontal axis as varying from single to multiple. A cue is a stimulus, either consciously or unconsciously perceived, that results in a response by the receiver. Figure 9.2 relates 12 different media to these two factors. A medium may vary somewhat in richness, depending on its use by sender and receiver. For example, e-mail may be associated with slower or quicker feedback than indicated in Figure 9.2. The speed depends on accessibility to e-mail messages and the receiver’s tendency to reply immediately or later. Messages that require a long time to digest are low in richness. Julia Stewart, for example, makes a special effort to employ rich media through one-on-one and FIGURE 9.2 Examples of Media Richness Fast Face-to-face dialogue Videoconference Speed of Personal Feedback Telephone conversation Instant messages Voice mail Text messages E-mail Letters/memos Organization’s own videos Organization’s website Formal written documents Formal numerical documents Slow Single Cues and Language Multiple Chapter 9 Interpersonal Communication in Organizations small group meetings and personal phone calls. She comments: “I feel strongly about returning people’s phone calls and treating them with dignity. Everybody deserves a return phone call. Employees have to return franchisee phone calls within 24 hours. That’s standard procedure.” Data are the output of the communication. Face-to-face dialogue is shown as the highest in richness in Figure 9.2 and formal numerical documents as the lowest. The data become information when they reinforce or change the receivers’ understanding. All of the media identified in Figure 9.2 clearly have their place and use. Moreover, a complex decision, such as DineEquity’s decision to acquire Applebee’s, requires the use of multiple media—ranging from formal documents prepared for shareholders and governmental agencies to face-to-face dialogue with executives and franchisees. The effective processing of a complex decision may start with face-toface dialogue to gain an understanding and agreement on the issues and problems to be addressed. Then, some of the individuals may be assigned the task of developing formal documents related to the decision. These documents are likely to be the basis for further face-to-face dialogue. Recall Julia Stewart’s comment that she often comes up with ideas while taking a shower. She states: “I have a pad I keep in my bathroom, and when I get an idea, I just start writing. I bring these little pieces of paper into the office.” Meaning and Feedback The sender’s message is transmitted through channels to the receiver’s five senses in interpersonal communications. As Figure 9.1 suggests, received messages are changed from their symbolic form (e.g., spoken words) to a form that has meaning. Meaning represents a person’s thoughts, feelings, beliefs, and attitudes. Encoding gives personal meaning to messages that are to be sent. Vocabulary and knowledge play an important role in the sender’s ability to encode. Unfortunately, some professionals have difficulty communicating with people in general. They use vocabulary that only other professionals in the same field can understand. Lawyers often encode (write) contracts that directly affect consumers but use language that only other lawyers can decode. Consumer groups have pressed to have such contracts written in a language that almost everyone can understand. As a result, many banks, credit card firms, and other organizations have simplified the language in their contracts. Decoding gives personal, interpreted meaning to messages that are received. People decode messages so that the meanings received are reasonably close to the meanings transmitted. The accurate decoding of messages is often a major challenge in communicating. Communication accuracy should be evaluated in relation to an ideal state. This occurs when the sender’s intended meaning and the receiver’s interpretation of it are the same.5 The transmission of factual data of a nonthreatening nature approximates the ideal state. For example, the sharing of the time, place, and procedures for a high school or college commencement ceremony generally results in easy and accurate interpersonal communication. The interpersonal communication process during a meeting to terminate a long-term employee due to downsizing is a complex matter. Consider the reflections of a leader who has had to meet with and terminate employees who were performing well: If you have done it as long as I have, the challenge is that you focus on the job so much that is to be done that you ignore the individual and it can become cold. You can just race through the process. If this is the first time you have done it, you can be so caught up in the sympathetic role that one must play that you are not able to convey the message. So it is striking the appropriate balance between the two extremes.6 257 258 Part 3 Leadership and Team Behaviors Communication Insight It’s important to listen to what people are proud of as well as what they think we should change. You learn so much from asking the questions of a wide variety of people in the organization. Feedback is the receiver’s response to the message. It lets the sender know whether the message was received as intended. Interpersonal communication becomes a dynamic, two-way process through feedback, rather than just a one-way event. Interpersonal Barriers Barriers to interpersonal communication are numerous.7 Let’s review briefly the more important barriers that stem from Patricia Woertz, Chairman and CEO, Archer Daniels individual differences and perceptions. Later in the chapter, we Midland address cultural barriers in interpersonal communications. Individual personality traits that serve as barriers to communication include low adjustment (nervous, self-doubting, and moody), low sociability (shy, unassertive, and withdrawn), low conscientiousness (impulsive, careless, and irresponsible), low agreeableness (independent, cold, and rude), and low intellectual openness (dull, unimaginative, and literal minded). Introverts are likely to be more quiet and emotionally inexpressive (see Chapter 3) than extroverts. Individual perceptual errors include perceptual defense (protecting oneself against ideas, objects, or situations that are threatening), stereotyping (assigning attributions to someone solely on the basis of a category in which the person has been placed), halo effect (evaluating another person based solely on one impression, either favorable or unfavorable), projection (tendency for people to see their own traits in others), and high expectancy effect (prior expectations serve to bias how events, objects, and people are actually perceived). Individuals who make the fundamental attribution error of underestimating the impact of situational or external causes of behavior are not likely to communicate effectively. This error too readily results in communicating blame or credit to other individuals for outcomes rather than to oneself. A related attribution error is the self-serving bias (communicating personal responsibility for good performance but denying responsibility for poor performance). (See Chapter 4.) Executives at GM and Chrysler blamed unions, the recession, banks, and the government for their financial problems. They didn’t place any blame on their own decisions to produce cars that many consumers didn’t want to buy. In addition to these underlying personal communication barriers, there are direct barriers, as discussed next. Five of the direct barriers include noise, semantics, language routines, lying, and distortion. Noise Noise represents any interference with the intended message in the channel. A radio playing loud music while someone is trying to talk to someone else is an example of noise. Noise sometimes can be overcome by repeating the message or increasing the intensity (e.g., the volume) of the message. Semantics Semantics is the special meaning assigned to words. Thus, the same words may mean different things to different people.8 Consider the semantics for five words in American (U.S.) English versus British English vocabularies: Pavement: American—a hard road surface; British—footpath, sidewalk. Table (verb): American—to remove from discussion; British—to bring to discussion. Tick off (verb): American—to anger; British—to rebuke. Canceled check: American—a check paid by the bank; British—a check that is stopped or voided. Ship: American—to convey by boat, train, plane, truck, or other means; British—to convey only by boat.9 Chapter 9 Interpersonal Communication in Organizations Language Routines A person’s verbal and nonverbal communication patterns that have become habits are known as language routines. They can be observed by watching how people greet one another. In many instances, language routines are quite useful because they reduce the amount of time needed to communicate. They also provide predictability in terms of being able to anticipate what is going to be said and how it is going to be said. The image and strategy of Intel is reinforced through language routines, including its slogan: “Intel Inside.” This slogan is supported by Intel’s saying “Innovations that move the world forward.” Intel’s slogan reinforces its brand image, namely, “Intel pushes the boundaries of innovation so our work can make people’s lives more exciting, fulfilling, and manageable. And our work never stops.”10 Language routines can cause discomfort, offend, and alienate when they put down or discriminate against others. Many demeaning stereotypes of individuals and groups are perpetuated through language routines.11 Lying and Distortion Lying means the sender states something that is believed to be false in order to seriously mislead one or more receivers.12 During the recent recession and collapse of the stock market, it was revealed that Bernard Madoff masterminded a Ponzi scheme that resulted in the largest fraud in history—$50 billion in losses to investors. This and events related to other distortions shook the public’s trust in financial institutions and government agencies in the United States.13 Everyday social flattery in conversations may not be completely honest, but it is normally considered acceptable and rarely regarded as dishonest (lying). Distortion represents a wide range of messages that a sender may use between the extremes of lying and complete honesty.14 Of course, the use of vague, ambiguous, or indirect language doesn’t necessarily indicate a sender’s intent to mislead. This form of language may be viewed as acceptable political behavior. Silence may also be a form of distortion, if not dishonesty. Not wanting to look incompetent or make his or her manager look bad in a departmental meeting, a subordinate may remain quiet instead of expressing an opinion or asking a question. As discussed in Chapter 4, personal distortion in interpersonal communications may occur through impression management, which represents the attempt by individuals to manipulate or control the impressions that others form about them. In Table 4.3 (page 119), we reviewed five impression management tactics: self-promotion, ingratiation, intimidation, supplication, and exemplification. An additional tactic is facesaving. Face-saving often involves (1) apologizing in a way to convince others that the bad outcome isn’t a fair indication of what the sender is really like as a person; (2) making excuses to others by admitting that the sender’s behavior in some way caused a negative outcome, but strongly suggesting that the person isn’t really as much to blame as it seems (because the outcome wasn’t intentional or there were extenuating circumstances); or (3) presenting justifications to others by appearing to accept responsibility for an outcome, but denying that the outcome actually led to problems. When the opportunity is present, shifting blame for problems or a failure to meet a goal is a common means of face-saving.15 When Blake Jorgensen was fired as chief financial officer from Yahoo!, Carol Bartz, Yahoo’s CEO, said the dismissal was necessary to speed up the decision making and have senior leaders support her strategy for turning the company around. Yahoo’s two previous CFOs were removed for similar stated reasons. Do you suspect that the dismissal of the three CFOs was a form of scapegoating to minimize the acknowledgment of other problems? Impression management strategies can range from relatively harmless minor forms of distortion (being courteous to another person even if you don’t like the individual), to messages that use extreme ingratiation and self-promotion to obtain a better raise or promotion than others, to intimidation. In brief, the greater the frequency of distortion 259 260 Part 3 Leadership and Team Behaviors tactics and the more they approach the lying end of the distortion continuum, the more they will serve as a hurdle to interpersonal communication.16 Learning Goal 2. Explain the factors that foster ethical communications. Ethical Interpersonal Communications In Chapter 2, we discussed the ethical principles and practices that provide the underlying foundation for ethical interpersonal communications. In this section of the chapter, we discuss factors that foster ethical interpersonal communications. The individual is more likely to incorporate values and principles that distinguish right from wrong in communications through effective dialogue. The barriers to effective communication—such as noise, confusing semantics, inappropriate language routines, and lying—will be reduced when effective dialogue takes place. Dialogue is a process whereby people suspend their defensiveness to enable a free flow of exploration into their own and others’ assumptions and beliefs. Dialogue includes (1) asking questions and listening to learn, (2) seeking shared meanings, (3) integrating multiple perspectives, and (4) uncovering and examining assumptions. As a result, dialogue can build mutual trust, common ground, and the increased likelihood of ethical interpersonal communication.17 A necessary condition for dialogue is assertive communication. Assertive communication means confidently expressing what you think, feel, and believe while respecting the right of others to hold different views. Ethical dialogue requires that interacting individuals demonstrate multiple abilities and behaviors. Figure 9.3 illustrates the idea that ethical dialogue is characterized by a specific group of interrelated abilities and behaviors. These include communication openness, constructive feedback, appropriate self-disclosure, and active listening. Through the factors of ethical dialogue and assertive communication, workplace honesty will be more prevalent. Julia Stewart has built a reputation for ethical dialogue and assertive communication over her career. Among many, consider these two testimonials.18 Bill Floyd, vice president of operations at Taco Bell and Stewart’s manager when she was there, comments: “We used to say that an important determinant of success was whether the crew adopted [managers] and saw them as someone who connected with them and empathized. Julia fit that to a T.” Karen Eadon, senior FIGURE 9. 3 Factors that Foster Ethical Dialogue Communication Openness Constructive Feedback Dialogue Appropriate Self-Disclosure Active Listening Chapter 9 Interpersonal Communication in Organizations vice president of marketing at Applebee’s during Stewart’s tenure there as president, remembers Stewart as a “strong leader” who often invited opinions before making strategic decisions. “Julia was very open to divergent points of view and to vigorous discussion that would allow her to see all sides.” In reflecting on the importance of dialogue, Stewart states: “People don’t understand, first, that franchising is highly regulated by the U.S. government and, second, that it’s much harder than running a regular company. I don’t demand or dictate anything: I influence, I collaborate, I persuade. Franchisors need to be mindful of the partnership. At the core of being a franchisor, you’d better desire to be a partner. If you don’t want to be a partner, it will never work.” Communication Openness Communication openness may be viewed as a continuum ranging from closed, guarded, and defensive to open, candid, and supportive.19 Figure 9.4 shows that, at the extreme left-hand side of the continuum, messages are interpreted through low trust, hidden agendas, and concealed goals. Communication occurs on two levels: direct and meta-communication. Metacommunication brings out the (hidden) assumptions, inferences, and interpretations of the parties that form the basis of open messages. In closed communication, senders and receivers consciously and purposely hide their real agendas and “messages.” Game playing is rampant. Meta-communication focuses on inferences such as (1) what I think you think about what I said; (2) what I think you really mean; (3) what I really mean, but hope you don’t realize what I mean; (4) what you’re saying, but what I think you really mean; and (5) what I think you’re trying to tell me but aren’t directly telling me because . . . (you’re afraid of hurting my feelings, you think being totally open could hurt your chances of promotion, and so on). At the extreme right-hand side of the continuum in Figure 9.4, communication is open, candid, and supportive. Messages are interpreted through high trust, shared agendas, and revealed goals.20 The words and nonverbal cues sent convey an authentic message that the sender chose without having a hidden agenda. Breakdowns in communication at the right end of the continuum are due primarily to honest errors (e.g., the different meanings that people assign to words such as soon FIGURE 9.4 Elements in Communication Openness Message Transmission Closed Open Low High Hidden Shared Concealed Revealed Trust Agendas Goals 261 262 Part 3 Leadership and Team Behaviors or immediately). Communication openness usually is a matter of degree rather than an absolute. The nature of language, linguistics, and different situations (coworker to coworker, subordinate to superior, friend to friend, or spouse to spouse) creates situations that allow for degrees of shading, coloring emphasis, and deflection in the use of words and nonverbal cues as symbols of meaning. Insights for Individuals The degree of openness must be considered in relation to the setting. There are three important factors in a setting. First, the history of the relationship is perhaps the most significant factor affecting openness. Consider the case of Don and Argie’s relationship. Has Don violated Argie’s or others’ trust in the past? Has Don been dishonest and unethical with Argie or others? Has Don provided cues (verbal and/or nonverbal) soliciting or reinforcing Argie’s attempts to be open and candid? Or has Don provided cues to the contrary? Has the history of the relationship created a level of such comfort that both Argie and Don can focus on direct communication, rather than meta-communication? Second, if the communication is likely to be partly adversarial or Don is committed to damaging or weakening Argie’s position or gaining at Argie’s expense through unethical acts, guarded communication is likely. Conversely, if the communication is likely to be friendly and Don is trying to be supportive of Argie, strengthen her position, or enhance her esteem, guarded communication may be viewed as irrational. Third, when Argie communicates with someone of higher status and power, she is communicating with someone who has some control over her future. That person may be responsible for appraising her performance, judging her promotability, and determining the amount of her merit pay increase. The tendency in such a case is to project a favorable image and to state negative messages with qualifiers. Constructive Feedback In giving feedback, people share their thoughts and feelings about others. Feedback may involve personal feelings or reactions to others’ ideas or proposals. The emotional impact of feedback varies according to how personally it is focused. When a person attempts to achieve open communication, feedback should be supportive (reinforcing ongoing behavior) or corrective (indicating that a change in behavior is appropriate). Table 9.1 provides a questionnaire that can be used by you and other employees to diagnose interpersonal feedback practices within an organization. The greater the frequency of “agree” and “strongly agree” responses to the 15 feedback practices, the greater the degree of open, and most likely ethical, interpersonal communications you perceive within the organization. The first four items in Table 9.1 concern corrective feedback from your superiors and coworkers. Corrective feedback is not necessarily bad for the person who is receiving it. Its effectiveness is largely determined by how the feedback is given. The second section in Table 9.1 (items 5 through 8) concerns the degree to which positive feedback is given to you by your manager. Positive feedback reinforces and rewards certain behaviors so that you will repeat them in the future. The third section (items 9 through 12) concerns the degree to which positive feedback is given by your peers. The first three sections of this questionnaire all concern the degree to which positive or negative feedback is received from sources external to you. By contrast, the fourth section (items 13 through 15) focuses on internal feedback, for example, your self-talk. This diagnostic questionnaire clearly shows the variety of feedback forms that are available to employees in organizations. A lack of compatibility among these forms of feedback for you may indicate serious interpersonal communication problems in your organization. Chapter 9 Interpersonal Communication in Organizations TABLE 9.1 Diagnosis of Feedback Practices Read each of the following statements and record your perceptions about the feedback practices you experienced in a previous job. Respond on the continuum that ranges from strongly disagree to strongly agree, as follows: 1 Strongly Disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree CORRECTIVE FEEDBACK 1. Your manager lets you know when you make a mistake. 2. You receive a formal report of poor performance. 3. Coworkers tell you that you have done something wrong. 4. You are told when you should be doing something else. 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 POSITIVE FEEDBACK FROM YOUR MANAGER 5. You receive thanks after completed jobs. 6. Your manager tells you when you are doing a good job. 7. You have a regular performance review with your manager. 8. The manager treats you as a mature adult. 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 POSITIVE FEEDBACK FROM PEERS 9. Peers congratulate you for how much you accomplish. 10. Peers compliment you for the quality of your work. 11. You know more people are using the company’s product or service because of your efforts. 12. Peers like you very much. INTERNAL FEEDBACK 13. You know when you have met your goals. 14. You can see the results of finding better ways of doing the job. 15. You know how much you can do without making a mistake. 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Insights for Individuals The following are insights for constructive and ethical feedback that can foster open communication21: • It is based on a foundation of trust between sender and receiver. When an organization is characterized by competitiveness, the emphasis is on the use of power to punish and control, rigid superior–subordinate relationships, and a lack of trust for constructive and ethical feedback. It is specific rather than general. Saying “You are a dominating person” isn’t as • useful as saying “Just now when we were deciding the issue, you did not listen to what others said. I felt I had to accept your argument or face attack from you.” • It is given at a time when the receiver appears to be ready to accept it. When a person at Dell has just been downsized, that person will probably be angry, upset, or defensive. This isn’t the time for you to bring up new issues. • It is checked with the receiver to determine whether it seems valid. The sender can ask the receiver to rephrase and restate the feedback to test whether it matches the intended message. It covers behaviors that the receiver may be capable of doing something about. • • It doesn’t include more than the receiver can handle at any particular time. When employees are about to be laid off, they are not ready to hear about everything they do that annoys you. Individuals, teams, and organizations all depend on feedback to improve the way they develop and perform. One approach to obtaining such feedback is through the collection of perceptions from multiple individuals about the behaviors and performance 263 264 Part 3 Leadership and Team Behaviors of a single individual. For example, 360-degree feedback is a questionnaire-based process that gathers structured feedback from a number of people about the competencies and behaviors of an individual or team. Increasingly, this is referred to as multisource feedback. For a manager, questionnaires on behaviors (e.g., teamwork, leadership, goal setting) might be completed by oneself, subordinates, peers, superior, and customers. The results are compiled in a feedback report, with data from each source presented separately. These data and results are provided to the individual, who then develops a plan for building strengths and improving personal performance. Normally, this discussion would take place with the person’s superior or a consultant. The use and application of 360-degree feedback is controversial. Clearly, there needs to be an ethical environment of trust and communication openness before the implementation of a formal 360-degree feedback process. It doesn’t work in a highly political or bureaucratic organization. It may not work well when the feedback is used as part of a performance review process unless specific knowledge, skills, and abilities can be linked to specific performance goals. In general, 360-degree feedback appears to work best if it is used for coaching and professional development purposes.22 Appropriate Self-Disclosure Self-disclosure is any information that individuals communicate (verbally or nonverbally) about themselves to others. People often unconsciously disclose much about themselves by what they say and how they present themselves to others. The ability to express yourself to others usually is basic to your career and professional development.23 Nondisclosing individuals may repress their real feelings because to reveal them is threatening. Conversely, total-disclosure individuals, who expose a great deal about themselves to anyone they meet, actually may be unable to communicate with others because they are too self-centered. The presence of appropriate self-disclosure, say, between superior and subordinate or team members and customers, can facilitate dialogue and sharing of work-related problems. Insights for Individuals A person’s level in an organization often complicates self-disclosure. A person is more likely to reduce self-disclosure to those having greater formal power because of their ability to punish. Even when the employee is able and willing to engage in “appropriate” forms of self-disclosure at work, the perception of the manager’s trustworthiness in not using the revealed information to punish, intimidate, or ridicule is likely to influence the amount and form of the employee’s self-disclosure. As discussed in the case at the end of Chapter 2, one of the more sensitive areas of appropriate self-disclosure relates to dating and romance with coworkers. Of major concern in most organizations is a romantic or dating relationship between a manager and subordinate. A concern is that the manager will treat the romantic subordinate differently than other subordinates performing at the same level through better pay raises, promotion opportunities, and assignments. As for keeping an office romance a secret, it’s not possible. As one business relationship specialist comments: “If you think no one knows, everyone knows.” Increasingly, organizations require employees who are romantically involved and work in the same reporting group to disclose their relationship. Such disclosure represents one way to minimize—and, it is hoped, avoid—conflicts of many types. Active Listening Active listening is necessary to encourage appropriate levels of ethical feedback and openness. Active listening involves paying attention, withholding judgment, reflecting, clarifying, summarizing, and sharing. Listening is effective when the receiver understands the sender’s message as intended. Chapter 9 Interpersonal Communication in Organizations As much as 40 percent of an eight-hour workday for many employees is devoted to listening. Tests of listening comprehension suggest that people often listen at only 25 percent efficiency. Listening influences the quality of peer, leader–subordinate, and employee–customer relationships. Employees who dislike a manager may find it extremely difficult to listen attentively to the manager’s comments during performance review sessions. Moreover, active listening is a necessary condition for learning. The Greek philosopher Epictetus wisely wrote: “It is impossible for a man to learn what he thinks he already knows.” Active listening abilities are interrelated. That is, the individual can’t practice one without improving the others. Active listening is much easier to read about than to develop and practice. The more a person practices active listening skills, the more he is able to enter into effective dialogue. Moreover, the listening insights make clear that active listening is not feasible without constructive feedback.24 Insights for Individuals Adapted from the book Active Listening: Improve Your Ability to Listen and Lead, we offer the following insights to increase active listening skills25: • • • • • A primary goal of active listening is to set a comfortable tone and allow time and opportunity for the other person to think and speak. The individual should pay attention to one’s frame of mind, body language, and the other person. The individual should be present, focus on the moment, and operate from a place of respect. Active listening requires an open mind. As a listener, the individual needs to be open to new ideas, new perspectives, and new possibilities. Even when good listeners have strong views, they suspend judgment, hold their criticism, and avoid arguing or selling their point right away. The individual should think: “I’m here to understand how the other person sees the world. It is not time to judge or give my view.” Active listening is first about understanding the other person, then about being understood. As the individual gains a clearer understanding of the other person’s perspective, she can then introduce her ideas, feelings, and suggestions and address any concerns. The individual might talk about a similar experience she had or share an idea that was triggered by a comment made previously in the conversation. Active listening involves the use of questions to double-check any issue that is ambiguous or unclear, which is a component of constructive feedback. Openended, clarifying, and probing questions are important tools. Open-ended questions draw people out and encourage them to expand their ideas (i.e., “What are their thoughts on . . . ?” or “What led them to draw this conclusion?”) Clarifying questions ensure understanding and clear up confusion. Any who, what, where, when, how, or why questions can be clarifying questions, but those are not the only possibilities. An employee might say, “I must have missed something. Could you repeat that?” or “I am not sure that I got what you were saying. Can you explain it again another way?” By asking questions, he invites reflection and a thoughtful response instead of telling others what to do. He might ask, for example, “More specifically, what are some of the things you’ve tried?” or “What is it in your own style that might be contributing to the trouble with others? Restating key themes as the conversation proceeds confirms and solidifies the listener’s grasp of the other person’s point of view. It also helps both the listener and other person(s) to be clear on mutual responsibilities and follow-up. The listener should briefly summarize what she understood as she listened (i.e., “It sounds as if your main concern is . . .” or “These seem to be the key points you have expressed . . .”). She could also ask the other person to summarize. 265 266 Part 3 Leadership and Team Behaviors The following Change Competency feature reports on the use of active listening by Sue Powers, the chief information officer of Travelport GDS.26 In her role, Powers oversees the global product and development initiatives of the Worldspan, Apollo, Galileo GDS, and Airlines Services units. These are lines of businesses within Travelport. Travelport GDS is a major provider of multi-host technology platforms for airlines worldwide. Each day Travelport GDS processes more than 1 billion transactions. It is a major provider of web-based travel e-commerce and services in the global travel industry.27 In this feature, Sue Powers focuses on the communication processes used to achieve an organizational change. Change competency Susan Powers, Chief Information Officer, Travelport GDS Susan Powers relies on a communication process that she calls socializing an idea to nudge and encourage her colleagues to consider a new information technology system or business process. The approach is an active one. It requires more than simply running an idea up the flagpole. Socializing means practicing active listening and communication outside formal meetings, where people are less guarded. Powers finds that during casual conversations (in the hallway, in their offices, over lunch), people are more at ease and more willing to discuss change. They also are more likely to discuss their objections to an idea, making it possible to come up with solutions. In a formal setting, people can feel pushed into an idea. In informal settings, they feel they can be more honest. For example, a few years ago Powers wondered why they couldn’t get the same Internet access deal she had at home: an inexpensive DSL connection. At the time, the business, which operated travel reservation systems, used a fairly low-band connection linking the company to its travel agent customers. Powers and David Lauderdale, the chief technology officer, began talking with the 650-member technology group about how much more flexible and efficient a standard Internet protocol network could be. The technology group was sold, but they had to convince the rest of the company. Objections to the new technology came fast and furious. Some business managers speculated that travel agents wouldn’t want to buy their own PCs and Internet service, preferring to have them provide their connectivity. Others worried about the technology transition. Salespeople said they could not get out of their contracts, which required them to provide dedicated service and equipment. Powers and her team spent several weeks bringing the idea up again and again with employees and customers during lunch, after company meetings, at after-hours get-togethers, at company functions, and during any casual conversation. Powers didn’t emphasize cost savings at first (although the new system would ultimately save tens of millions of dollars). Instead, she asked for reactions to the potential benefits of the change (the new system would be more reliable, easier to maintain, and simpler to use). Powers says, “The early feedback caused us to think more about what was in this for everybody, and we were able to better think through the benefits for customers and salespeople. We ended up with a better plan.” Powers used the feedback from these informal discussions to write a business case for the new system, and her plan was immediately approved. When it came time to rewrite customer contracts, the travel agents were sold on the added benefits they would get. The company soon completed its rollout of the DSL network. Power notes “getting people involved early by just talking with them [through active listening] allowed us to address objections and actually have a better plan. By the time we did the business plan, we had everybody pretty much on board.” Powers thinks “The next big thing in our business will be ‘green’ initiatives. This will range Chapter 9 from providing carbon-tracker information to corporations and travelers to ensuring that our company, our employees, and the data center operate in a ‘green’ fashion.” She concludes: “The best advice I can give to future leaders is it’s all about the people, Interpersonal Communication in Organizations 267 and communication is key. Make sure your front-line managers understand the strategy, objectives, metrics, and business drivers. If you have a committed, well-informed, wellprepared, and motivated staff, you will be successful.” To learn more about Travelport, go to www.travelport.com. Nonverbal Communication Nonverbal communication includes the process of sending “wordless” messages by means such as facial expressions, gestures, postures, emotional tones of voice, grooming, clothing, colors, and use or type of space.28 Nonverbal cues may contain many direct or hidden messages and can influence the process and outcome of “words” in communication. Even when individuals are silent, they are sending messages, which may or may not be the intended messages (including boredom, fear, anger, or depression). Nonverbal signals are a rich source of information for a leader. A person’s own nonverbal behavior can be useful in responding to others, making stronger connections with others, and conveying certain impressions about oneself. The proportion of emotional reactions that are expressed through nonverbal signals may exceed 90 percent.29 Types of Nonverbal Cues A framework for considering types of personal nonverbal cues is PERCEIVE, an acronym that stands for the following terms: (1) Proximity, (2) Expressions, (3) Relative orientation, (4) Contact, (5) Eyes, (6) Individual gestures, (7) Voice, and (8) Existence of adapters. A brief review of each follows30: • Proximity is the physical distance between individuals. Generally, individuals sit, stand, and want to be near those they like. Increased proximity is usually an indication of feelings of liking and interest. • Expressions are observed on the face and can last as little as 1/15th of a second. These very brief expressions occur when people are trying to hide a feeling. Interestingly, when people begin to experience an emotion, their facial muscles are triggered. If they suppress the expression, it’s shown for only 1/15th of a second. If they do not suppress it, the expression will appear prominently. The six universal expressions that most cultures recognize are happiness, sadness, anger, fear, surprise, and disgust. Smiling can be real or false, interpreted by differences in the strength and length of the smile, the openness of the eyes, and the symmetry of expression. Relative orientation is the degree to which individuals face one another. Individuals • sitting side by side is usually an indication that they are interested in and focused on the other person. As individuals become less interested in another person, they tend to angle their bodies away. A good way to understand relative orientation is to observe where a person’s feet are placed. Often individuals will point their feet in the direction they truly want to go. • Contact refers to physical contact. Generally, the amount and frequency of physical contact demonstrate closeness, familiarity, and degree of liking. A lot of touching usually indicates strong liking for another person. Learning Goal 3. Diagnose nonverbal communication behaviors. 268 Part 3 Leadership and Team Behaviors • • • • Eyes primarily show whom or what people are most interested in or like. One can gauge liking and interest by the frequency and duration of time spent looking. Few gestures carry more weight than looking someone in the eyes or face. Eye and face contact displays your willingness to listen and your acknowledgment of the other person’s worth. Although eye contact does not indicate truthfulness or honesty (as some people believe), it does usually show interest in the other person’s idea or point of view. However, prolonged and intense eye contact does not usually occur unless feelings of hostility, defensiveness, or romantic interest are present. Lack of interest may be indicated through contractions of the pupils or wandering eyes. Individual gestures can convey an image in a person’s mind that is sometimes not spoken. Some typical gestures are ones that describe an emotion or experience (e.g., sobbing gesture or frenetic moving of the hands) or gestures that identify where objects are in relation to one another. Gestures also reveal how people are feeling. People tend to gesture more when they are enthusiastic, excited, and energized. People tend to gesture less when they are demoralized, nervous, or concerned about the impression they are making. For more about nonverbal communication, see the Communication Competency feature in Chapter 4 entitled “Hand Gestures.” The feature addressed the different meanings of three hand gestures used in the United States and how they would be interpreted in certain other cultures. Voice or speech often provides information about the demographics of a speaker (e.g., gender, age, area of origin, social class). Voice can also reveal emotions, which are transmitted through the tone of the voice, accentuation of words, rapidity of speech, and number of speech errors. Typically, speech errors indicate discomfort and anxiety. A person who begins to produce a lot of speech errors may be anxious and ill at ease. Existence of adapters is the last element of PERCEIVE. Adapters are small behaviors that tend to occur when people are stressed or bored with a situation. Examples are playing with rings, twirling a pen, or touching one’s hair. As meetings become too long, an increasing number of adapter behaviors tend to emerge among the people in the room. Physical Environment Some organizations are attempting to influence interpersonal communications through the physical environment with use of feng shui, which we introduced in Chapter 4. Feng shui is the belief that space needs to be in harmony with the environment. We noted that the Chinese phrase feng shui means “wind and water” to represent the flow of energy and harmony. Recall the Across Cultures Competency feature in Chapter 4 entitled “McDonald’s Use of Feng Shui.” A few of the common recommendations for office arrangements related to nonverbal communication based on feng shui include the following: (1) You should have a full view of the room’s entrance door by merely looking up from your desk. (2) You should be able to see outside while sitting at your desk. If the office doesn’t have a window, brighten up the lighting and use a picture of the outdoors. (3) Your desk should not be placed at the side of the door. You can place a screen in the space between your desk and the doorway if necessary. (4) You should have a wall at your back while seated. Presumably, it gives you a “commanding” position.31 Although the ability of feng shui to impact “harmony and energy” has been questioned, its principles for designing buildings and offices, including the placement of furniture and objects, are increasingly being used to varying degrees in Western societies.32 For people in North America who are interested in feng shui, the American Feng Shui Institute is a good place to start for more details about its concepts and principles.33 Chapter 9 Interpersonal Communication in Organizations Importance to Verbal Messages Nonverbal communication is an important complement to verbal communication; neither is adequate by itself for effective dialogue. A few of the ways in which verbal and nonverbal cues can be related are as follows: • Repeating, such as when verbal directions to some location are accompanied by pointing. • Contradicting, such as when you say “What, me nervous?” while fidgeting and perspiring anxiously before taking a test. This is a good example of how the nonverbal message might be more believable when verbal and nonverbal signals conflict. • Substituting nonverbal for verbal cues, such as when you return from the manager’s office with a stressful expression that says “I’ve just had a horrible meeting with my manager”—without a word being spoken. • Complementing the verbal cue through nonverbal “underlining,” such as when you pound on a table, place a hand on the shoulder of a coworker, use a tone of voice indicating the great importance attached to the message, or give a gift as a way of reinforcing an expression of gratitude or respect. Since the recent downturn and resulting distress in the U.S. and other economies, more and more companies have been downsizing their workforces. Layoffs at Yahoo!, The New York Times, JPMorgan Chase, and others make daily newscasts. Therefore, leaders need to learn how to handle laying off employees. The following Communication Competency feature presents the poor use of nonverbal communications by leaders related to layoffs.34 Communication competency Poor Nonverbal Signals Prior to Layoffs Marcia Finberg’s relationship with her CEO had been cordial during the three years she worked as vice president of marketing and business developments for a Phoenix hospital. The CEO always made small talk and followed up with her on projects. When this rapport suddenly stopped, she knew something was up. Three months later her job was eliminated. Finberg’s CEO went from being friendly with her to avoiding her and being curt. She knew the hospital was losing patients to a new medical center in the area and that her employer’s financial situation had become precarious. Finberg says her CEO’s cold response leading up to her being let go could have been a defense mechanism. “You don’t want to admit that under your stewardship the finances were such that you had to let someone from your executive team go,” she says. Ron Shewchuk, now a communications consultant, comments that he worked for an organization that went on a 15-year acquisition binge. This meant the company was constantly integrating acquired companies, which always meant consolidation and the job losses that come with it. The workplace became so cynical that some people kept “300-day clocks.” They morbidly would count down the days before the next layoff. Inevitably, the pink slips would come before the clocks ran out. The clocks became stark and daily nonverbal reminders of impending layoffs. Shewchuk notes that the CEO hadn’t directly communicated with employees for at least a decade. When John Boyd was chief intellectual property counsel of a midsize technology company, he says, the CEO and other executives made him feel like he wasn’t in the “inner circle.” He says he was continually left off of e-mail announcements congratulating teams on projects, even when he was on those teams. He didn’t wait to see what his fate might be; instead, Boyd left the company. 269 270 Part 3 Leadership and Team Behaviors Simma Lieberman, who owns a consulting firm in Albany, California, reflects on one technology company that hired her to deal with the aftermath of a layoff. The company laid off more than 200 people, many of whom were preparing for retirement. They received no benefits except outplacement services for one day. Security guards immediately escorted them out of the building. Senior management didn’t provide any explanations or communicate with existing staff about what had occurred. This turned otherwise loyal employees against the company. Lieberman states: “It was horrific what the company had done. The remaining employees were so demoralized. I couldn’t fix it.” The silence by higher management in this whole incident became a powerful and negative nonverbal signal to both the remaining and laid-off employees. Status Differences Nonverbal cues often strongly reveal status differences. The following are only three of the many relationships between nonverbal cues and organizational status: • Employees of higher status typically have better offices than do employees of lower status. For example, executive offices are typically more spacious, located on the top floors of the building, and have finer carpets and furniture than those of first-line managers. Most senior offices are at the corners, so they have windows on two sides. • The offices of higher status employees are better “protected” than those of lower status employees. Protected refers to how much more difficult it would be for you to, say, arrange to visit the governor of your state than for the governor to arrange to visit you. Top executive areas are typically least accessible and are often sealed off from others by several doors and assistants. Of course, having an office with a door and a secretary who answers the telephone protects even lower level managers and many staff personnel. • The higher the employee’s status, the easier that employee finds it to invade the territory of lower status employees. A superior typically feels free to walk right in on subordinates, whereas subordinates are more careful to ask permission or make an appointment before visiting a superior.35 Insights for Leaders Carried to excess, these and other nonverbal status cues are likely to create barriers to dialogue, especially from the perspective of the employees with lower formal status. However, effective leaders often use supportive nonverbal cues when meeting with subordinates, such as (1) lightly touching subordinates on the arm when they arrive and shaking hands, (2) smiling appropriately, (3) nodding to affirm what was said, (4) slightly pulling their chairs closer to subordinates and maintaining an open posture, and (5) engaging in eye contact to further demonstrate listening and interest.36 Learning Goal 4. Understand the importance of cultural and nonverbal barriers to communication. Intercultural Communication Cultural Barriers Intercultural communication occurs whenever a message sent by a member of one culture is received and understood by a member of another culture.37 The effects of cultural differences on interpersonal communication can be wide ranging. They depend on the degrees of difference (or similarity) between people in terms of language, Interpersonal Communication in Organizations religious beliefs, economic status, social values, physical characteristics, use of nonverbal cues, and the like. The greater the differences, the more likely it is that there will be barriers to achieving effective communication. In Iran, there is a concept called taarof, which is a set of social manners that seem polite or deceitful depending on one’s point of view. Taarof is a form of etiquette intended to harmonize social meetings and communications. It often involves displays of flattery and deference.38 In interpersonal communications among Iranians, people are expected to tell you what you want to hear to avoid conflict, or to offer hope when there is none. Iranians understand such practices and are not offended by them. Nasair Hadian, a political science professor at the University of Iran, comments: “You have to guess if people are sincere, you are never sure. Symbolism and vagueness are inherent in our language.” Kian Tajbakhsh, a social scientist who lived for many years in England and the United States before returning to Iran in 1996, continues: “Speech has a different function than it does in the West. In the West, 80 percent of language is explicit and as stated. In Iran 80 percent is implied.” Translation: In the West, yes generally means “yes.” In Iran, yes can mean “yes,” but it often means “maybe” or “no.” In Iran, “Listeners are expected to understand that words don’t necessarily mean exactly what they mean.”39 Cultural Context 271 IMAGE SOURCE Chapter 9 The conditions that surround and influence the life of an individual, ▲ group, or organization are its cultural context. Differences in cultural Differences in cultural context context may represent a barrier to communication.40 Nations’ cultures vary on a may represent a hurdle to communication because lowcontinuum from low context to high context. Figure 9.5 shows the approximate context countries, such as the placement of various countries along this continuum. United States, and high-context A high-context culture in interpersonal communication is characterized by (1) the countries, such as Japan, have establishment of social trust before engaging in work-related discussions, (2) the high value different communication norms. placed on personal relationships and goodwill, and (3) the importance of the surrounding circumstances during an interaction. In a high-context culture such as China, Korea, and Japan, people rely on paraphrasing, tone of voice, gesture, posture, social status, history, and social setting to interpret spoken words, all of which require time to cultivate. Factors such as trust, relationships among friends and family members, personal needs and difficulties, weather, and holidays must be taken into consideration. For example, Japanese executives—when meeting foreign executives for the first time—do not immediately “get down to business.” They engage in a period of building trust and getting to know each other that foreign executives often are impatient with but must conform to. In contrast, a low-context culture in interpersonal communication is characterized by (1) directly and immediately addressing the Across Cultures Insight tasks, issues, or problems at hand; (2) the high value placed on personal So much of our office jargon in the U.S. expertise and performance; and (3) the importance of clear, precise, and is colloquial, and we don’t even realize it. speedy interactions. Within low-context cultures such as Germany, Comments like “cover all the bases” or Switzerland, and the United States, the purpose of communica“three strikes and you’re out” don’t have tion is to often reveal actual intent, not conceal it. The individuany context value here in India at all. als often express what they mean and mean what they convey. People just don’t know what we are talkLeaders motivate employees with statements focusing on posiing about with such phrases. tive or corrective feedback and goal setting. In a heterogeneous country, such as the United States, multiple subcultures have Nina E. Woodward, Director, Business Development, Strategic Human Resource Management India their own unique characteristics. In contrast, the cultural context of a homogeneous country, such as South Korea or Japan, reflects the more uniform characteristics of its people. 272 Part 3 Leadership and Team Behaviors FIGURE 9. 5 Examples of Cultures on the Cultural Context Continuum Arab Greek Vietnamese Japanese Spanish Italian English North American Scandinavian Swiss Korean German Chinese HIGH CONTEXT LOW CONTEXT Source: Based on Hall, E. Understanding Cultural Differences. Yarmouth, ME: Intercultural Press, 1989; Munter, M., Guide to Managerial Communication: Effective Business Writing and Speaking, 5th ed. Englewood Cliffs, NJ: Prentice Hall, 1999. Ethnocentrism Ethnocentrism occurs when individuals believe that only their culture makes sense, has the “right” values, and represents the “right” and logical way to behave.41 This may be the greatest barrier to communication because it involves judging others from our own cultural point of view. It also involves making false assumptions about the ways others behave based on our own limited experiences. Individuals are not even aware that they are being ethnocentric because “we don’t understand that we don’t understand.” When two highly ethnocentric people from different cultures interact, there is little chance that they will achieve a common understanding. Ethnocentric reactions to differing views may be anger, shock, or even amusement. Ethnocentric people view all others as inferior and may recognize cultural diversity, but only as a source of problems. Their strategy is to minimize the sources and impacts of cultural diversity. Ethnocentric individuals ignore or deny that cultural diversity can lead to advantages. Ethnocentrism is best viewed along a continuum—everyone is, to some extent, ethnocentric.42 At one end of the continuum, ethnocentrism may be functional when one’s group or even nation is under attack or threat of attack. It forms the basis for patriotism and the motivation to sacrifice for one’s group. At the other end, it results in the tendency for people to see their own way as the only right way. This can be dangerous and may lead to poor communication that results in prejudice and discrimination. All intercultural exchanges are, to a lesser or greater degree, influenced by ethnocentrism. It acts as a perceptual filter (see our discussion of perception and attributions in Chapter 4) that affects verbal and nonverbal messages and how individuals see their source. We tend to initiate and continue communication with those to whom we are attracted. When we interact with someone from another culture, our perception of the other’s attractiveness is influenced by our degree of ethnocentrism. By definition, high ethnocentric individuals perceive themselves as very different and superior from other groups—within the same or other countries. Because of their sense of superiority, high ethnocentric individuals tend to judge other group members as less competent and less trustworthy, which adversely influences intercultural communications. The following Across Cultures Competency feature reports on Tahir Ayub’s experiences as a participant in PricewaterhouseCoopers’ (PwC’s) Ulysses Program.43 Tahir Ayub is an Audit and Assurance Group partner and the Alberta Private Company Services leader of PricewaterhouseCoopers LLP in Canada. As a business adviser, he Chapter 9 Interpersonal Communication in Organizations provides advice and acts as a sounding board to the owners and management of private companies in the various Canadian industries. The Ulysses Program is a global leadership development program at PwC. It was started in 2001 and has sent 80 partners from 32 territories on 26 projects. Among other purposes, this program enhances the participants’ intercultural communication abilities and appreciation for cultural context. PwC has 155,000 employees who work in 150 countries. They provide a variety of services in the fields of assurance, tax, human resources, performance improvement, and the like.44 Across Cultures competency Tahir Ayub, Partner, PwC Tahir Ayub’s role in the Ulysses Program at PricewaterhouseCoopers was to help village leaders in Africa’s Namibian outback grapple with their community’s growing AIDS crisis. Faced with language barriers, cultural differences, and limited access to electricity, Ayub and two colleagues learned that they needed to garner community support for programs to combat the disease. Ayub learned an important lesson as well: Technology isn’t always the answer. “You better put your beliefs and biases to one side and figure out new ways to look at things,” he said. PwC arranged for the trip and Ayub’s stay there as part of their Ulysses Program to develop global leaders. The partners “go local”—they are stripped of all the comforts they have grown to take for granted and given a specific task to complete. They must rely on their own resourcefulness to succeed. PwC believes such hands-on experience is essential to developing global leaders. On arrival, Ayub paired up with two other PwC partners whom he had never met before— one from the Netherlands and the other from Mexico. Having grown up in the United Kingdom and having gone to college in Vancouver, British Columbia, it was a life-changing experience: “When you work in a (culturally diverse) place like Vancouver, you work with people from different backgrounds and you think you are culturally aware,” he recalls. But working as part of the Namibia team, he was less sure of his openmindedness. He also learned that “perhaps the way you see things isn’t necessarily the best way”—a humbling experience for someone as successful as a PwC partner. After returning from Namibia, Ayub says he can still see the faces of the orphans he met, whose parents had died from AIDS. PwC says it can see that Ayub benefited from the experience. Today, he recognizes the importance of listening to different perspectives before making decisions. “Before, when I came across an issue that I thought I knew how to deal with, I would say that I didn’t have a lot of time to listen to everyone involved to make sure it was the right way to go. Now I am much more open to listening and to other people’s points of view,” he says. In reflecting on the Ulysses Program and other experiences, Tahir comments: “As a leader, you have to communicate clearly and most of all walk the talk; actions really do speak louder than words.” To learn more about PwC, go to www.pwc.com. Nonverbal Differences Because of the many differences in nonverbal expression, people from different cultures often misunderstand each other. This is a significant barrier to cross-cultural communication.45 We now review three forms of nonverbal cross-cultural communication: chromatics, chronemics, and body language. 273 274 Part 3 Leadership and Team Behaviors Chromatics Chromatics is communication through the use of color. Colors of clothing, products, packaging, or gifts send intended or unintended messages when people communicate cross-culturally. For example, in Hong Kong red signifies happiness or good luck. The traditional bridal dress is red, and at the Chinese New Year luck money is distributed in hong bao, red envelopes. Men in Hong Kong avoid green because of the Cantonese expression “He’s wearing a green hat,” which means “His wife is cheating on him.” In Chile, a gift of yellow roses conveys the message “I don’t like you,” and in the Czech Republic giving red roses indicates a romantic interest. In the United States, it is common to wear black when one is mourning, whereas in some locations in India, people wear white when they are mourning. In Asia, people like colored shampoos because they like the shampoo to be the color of their hair because they believe different or lighter colors change the color of their hair. In the United States, shampoos tend to be light colored because people see this as a sign of cleanliness and hygiene. Chronemics Chronemics reflects the use of time in a culture.46 Before reading any further, please complete the instrument in Table 9.2 to determine how you use your personal time. A monochronic time schedule means that things are done linearly, or one activity at a time. Time is seen as something that can be controlled or wasted by people. Time schedules are followed by employees in individualistic cultures, such as those in Northern Europe, Germany, and the United States. Being a few minutes late for a business appointment is an insult, so punctuality is extremely important. Keith Hughes is the former CEO Text not available due to copyright restrictions Chapter 9 Interpersonal Communication in Organizations 275 of Associates First Capital Corporation, a consumer finance company that has been acquired by Citigroup. He used to lock the doors when a meeting was supposed to start and didn’t unlock them until the meeting was over. A polychronic time schedule means that people tend to do several things at the same time.47 A more fluid approach is taken to scheduling time. Many people may like to drive and conduct business at the same time (cars and cellular phones) or watch the news and a ball game at the same time (picture-in-picture TV). Schedules are less important than personal involvement and the completion of business. In Latin America and the Middle East (e.g., Saudi Arabia and Egypt), time schedules are less important than personal involvement. In Ecuador, businesspeople come to a meeting 15 or 20 minutes late and still consider themselves to be on time. Polychronic cultures are deeply steeped in tradition rather than in tasks—a clear difference from their monochronic counterparts. They are more focused on relationships, rather than watching the clock. They have no problem being “late” for an event if they are with family or friends, because the relationship is what really matters. As a result, polychronic cultures have a much less formal perception of time. These cultures are much less focused on the preciseness of accounting for each and every moment. They are not as ruled by precise calendars and schedules as are monochronic cultures. Rather, they may even schedule multiple appointments simultaneously such that keeping on schedule is an impossibility. Many polychronic cultures have a past orientation toward time. The Chinese, for example, place great significance on the past. Body Language THE STUDIO DOG/PHOTODISC/GETTY IMAGES Posture, gestures, eye contact, facial expression, touching, voice pitch and volume, and speaking rate differ from one culture to another.48 As a simple, but potentially disastrous example, nodding the head up and down in Bulgaria means “no,” not “yes.” You must avoid using any gestures considered rude or insulting. For instance, in Buddhist cultures, the head is considered sacred, so you must never touch anyone’s head. In Muslim cultures, the left hand is considered unclean, so never touch, pass, or receive with the left hand. Pointing with the index finger is rude in cultures ranging from the Sudan to Venezuela to Sri Lanka. The American circular “A-OK” gesture carries a vulgar meaning in Brazil, Paraguay, Singapore, and Russia. Crossing your ankle over your knee is rude in Indonesia, Thailand, and Syria. Pointing your index finger toward yourself insults the other person in Germany, the Netherlands, and Switzerland. Avoid placing an open hand over a closed fist in France, saying “tsk tsk” in Kenya, and whistling in India. Prepare yourself to recognize gestures that have meaning only in the other culture. Chinese stick out their tongues to show surprise and scratch their ears and cheeks to show happiness. Japanese suck in air, hissing through their teeth to indicate embarrassment or “no.” Greeks puff air after they receive a compliment. Hondurans touch a finger to the face below the eye to indicate caution or disbelief. Finally, resist applying your own culture’s nonverbal meanings to other cultures. Vietnamese may look at the ground with their heads down to show respect, not to be “shifty.” Russians may exhibit less facial expression and Scandinavians fewer gestures than Americans are accustomed to, but that doesn’t mean that they aren’t enthusiastic. The British may prefer more distant personal and social space and might consider it rude if you move too close. Closely related is the concept of touch. Anglos usually avoid touching each other very much. In studies of touching behaviors, researchers observed people seated in outdoor cafes in each of four countries and counted the number of touches during an hour of conversation. The results were San Juan, Puerto Rico, 180 touches per hour; Paris, 110 per hour; Gainesville, Florida, 1 per hour; and London, 0 per hour.49 Body language, including gestures, eye contact, facial expressions, and touching, varies from one culture to another. ▼ 276 Part 3 Leadership and Team Behaviors Learning Goal 5. Discuss the role of communication networks. Interpersonal Communication Networks An interpersonal communication network is the pattern of communication flows, relationships, and understandings developed over time among people, rather than focusing on the individual and whether a specific message is received as intended by the sender. Networks involve the ongoing flow of verbal, written, and nonverbal messages between two people or between one person and others. Communication networks can influence the likelihood of a match between messages as sent and as actually received and interpreted. The more accurately the message moves through the channel, the more clearly the receiver will understand it. Individual Network The elements of interpersonal communication shown earlier in Figure 9.1 are based on a network of only two people. Obviously, communication often takes place among many individuals and larger groups. Claudia Gonzales, a telecommunications manager for Abaco Grupo Financiero in Mexico, normally has ongoing links with many people both inside and outside her organization. Her communication network extends laterally, vertically, and externally. Vertical networks typically include her immediate superior and subordinates and the superior’s superiors and the subordinates’ subordinates. Lateral networks include people in the same department at the same level (peers) and people in different departments at the same level. External networks include customers, suppliers, regulatory agencies, pressure groups, professional peers, and friends. Thus, a person’s communication network can be quite involved. Size limits the possible communication networks within a team or informal group. In principle, as the size of a team increases arithmetically, the number of possible communication interrelationships increases exponentially. Accordingly, communication networks are much more varied and complex in a 12-person team than in a 5-person team. Although each team member (theoretically) may be able to communicate with all the others, the direction and number of communication channels often are somewhat limited. In committee meetings, for example, varying levels of formality influence who may speak, what may be discussed, and in what order. The relative status or ranking of team members also may differ. Members having higher status probably will dominate communications more than those with lower status. Even when an open network is encouraged, a team member may actually use a limited network arrangement. A common prescription, especially for college graduates when they join an organization, is to work on developing an individual communication network. At present or in the future, how might you know if you have developed a strong inside individual network? If you are able to answer “yes” to most of the following questions, you are probably on the right track50: 1. Do I know people at more than one level of the organization? Do they know my name and what I do? 2. Do I know a number of the people whose work relates to mine in any way beyond my own department? 3. Am I involved in any interdepartmental activities (temporary assignments, committees, task forces, special projects, volunteer activities)? 4. Am I plugged into the grapevine? Do I find out quickly what’s up? 5. Do I take every opportunity to meet face to face to define and discuss complex problems, shifting priorities, areas of responsibility? 6. Do I know and talk with others about trends that will impact my job in the future and methods to get the job done today? 7. When I become aware of a problem that involves people from various areas, do I take the initiative to indicate my willingness to work on it? 8. Do I drop by to see people—even when I don’t need anything—as time permits? Chapter 9 Interpersonal Communication in Organizations Effective individual networking focuses on serving customers, streamlining internal processes, solving problems, and achieving organizational and unit goals. Networking that focuses on immediate and apparent self-serving interests and goals is often counterproductive and even more so when it serves to hurt or take advantage of others.51 For individual network effectiveness, the individual needs political skill—the ability to effectively understand others at work, and to use such knowledge to influence others to act in ways that enhance one’s long-term personal and/or organizational goals.52 Consider four of the dimensions of political skill53: • Networking ability—the degree to which individuals are adept at developing and using diverse networks of people. People in these networks tend to have capabilities seen as valuable and necessary for successful personal and organizational functioning. • Apparent sincerity—the degree to which individuals appear to others as possessing high levels of integrity, authenticity, sincerity, and genuineness. They are, or appear to be, honest, open, and forthright. • Social astuteness—the degree to which individuals are savvy observers of others and are keenly attuned to diverse social situations. They understand social interactions and accurately interpret their behavior, as well as that of others, in social settings. They have strong powers of discernment and high self-awareness. Interpersonal influence—the degree to which individuals use a subtle and convincing • personal style that exerts a powerful influence on those around them. Individuals high on interpersonal influence nonetheless are capable of appropriately adapting and calibrating their behavior to each situation in order to elicit particular responses from others. Because their actions are not interpreted as manipulative or coercive, individuals high in apparent sincerity inspire trust and confidence in and from those around them. A major study identified the primary causes of managerial failure in changing organizations. More than 1,000 successful U.S. managers participated in this study.54 Table 9.3 shows the top 10 major themes that were cited as causes of managerial failures. Although a failed manager is likely to be characterized by several themes, it is apparent that “ineffective communication skills/practices” is cited by the vast majority (81 percent) of managers. The failed managers typically did not effectively share critical information with individual employees and/or work teams. Also, they failed to listen to the concerns of those around them, with potentially devastating outcomes. In essence, these failed managers were poor networkers and lacked political skill. TABLE 9. 3 Themes in Causes of Managerial Failure: Perceptions of More Than 1,000 Successful Managers THEMES FREQUENCY OF MENTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 81% 78% 69% 64% 57% 56% 52% 50% 47% 45% Ineffective communication skills/practices Poor work relationships/interpersonal skills Person job mismatch Fail to clarify direction/performance expectations Failing to adapt and break old habits quickly Delegation and empowerment breakdown Lack of personal integrity and trustworthiness Unable to develop cooperation/teamwork Unable to lead/motivate others Poor planning practices/reactionary behavior Source: Adapted from Longenecker, C. O., Neubert, M. J., and Fink, L. S. Causes and consequences of managerial failure in rapidly changing organizations. Business Horizons, 2007, 50, 148. 277 278 Part 3 Leadership and Team Behaviors Informal Group Network An informal group network involves the communication pattern of multiple individual networks. By informal we mean those communication channels and messages that do not strictly follow the formal organization paths, such as when the president meets with or sends all employees an e-mail, or when a manager holds a weekly meeting with employees. The most common form of informal group network is the grapevine—the unofficial, and at times confidential, person-to-person or person-to-group chain of verbal, or at times e-mail, communication.55 The most common messages of the grapevine are rumors—unverified information, which may be of uncertain origin, that is usually spread by word of mouth or perhaps e-mail. Rumors are often a result of stress circumstances, like the perceived threats from major organizational changes. Of course, rumors themselves, especially when false, can be a source of stress and dissatisfaction. In general, the frequency of negative rumors is much greater than positive rumors in organizations.56 Four of the major ways that messages move through grapevines in organizations are as follows57: Single-strand chain refers to one person telling a rumor to the next, who then tells the next person, who tells the next, and so on. As such, the rumor is told to one person at a time and passed on to others. Accuracy is lower in this type of chain than in the others because of the many alterations the story is subject to with each retelling. • Gossip chain refers to only one person spreading the message, telling the story to most everyone with which the person comes in contact. This chain is likely to be the most slow moving. • Probability chain refers to one person randomly contacting several others and telling them the message. Those individuals, in turn, randomly contact several others and continue to spread it. This chain is not a definite channel because the message is spread to different people, bypassing others altogether. • Cluster chain refers to one person telling several close contacts who then pass it on to several people with whom they have close contacts. Regardless, people receive and transmit the message in terms of their personal biases, which results in the general theme being maintained but the details potentially being changed. It is often used to spread rumors and other news in organizations. Informal group networks, like grapevines, cannot be eliminated by leaders. In fact, leaders often participate in them. The best approach is to understand grapevines and develop strategies to use in preventing and combating false or inaccurate rumors and gossip both internally and externally to the organization.58 In an organization with low levels of communication openness, it is to be expected that informal group networks are likely to conflict with the formal employee network established by senior management. As you will recall from Figure 9.4, low communication openness is characterized by (1) closed, guarded, and defensive message transmission; (2) low trust; (3) hidden agendas; and (4) concealed goals. In this situation, it is likely that different informal group networks are likely to conflict with each other and be engaged in continuous power struggles. In contrast, with high levels of communication openness and other attributes of ethical interpersonal communication, individual networks, informal group networks, and formal employee networks will more often be mutually supportive and reasonably consistent with one another, thereby reducing barriers, inconsistencies, and confusion in communications within the organization.59 • Formal Employee Network A formal employee network is the intended pattern and flows of employee-related communication vertically—between levels—and laterally—between individuals, teams, departments, and divisions. In this chapter, we discussed several of the practices undertaken by Julia Stewart at DineEquity to shape, develop, and use informal and formal employee Chapter 9 Interpersonal Communication in Organizations networks. Our discussion of Tahir Ayub at PwC emphasized the importance of cultural context in a formal employee network such as the Ulysses Program at PwC. In our Change Competency feature on Susan Powers at Travelport GDS, she and her team used individual, informal, and formal employee networks to introduce ideas, receive feedback, and foster organizational change. In most chapters throughout this book, we present competency features on how leaders can foster or hinder the development of effective formal employee networks. Our discussion of six types of formal teams in Chapter 12—such as self-managed, virtual, and global—are examples of top leaders’ initiatives to form and influence various lateral and vertical formal employee networks. Also, we discuss the network design as one of the contemporary organizational designs in Chapter 15, Organization Design. Insights for Leaders All types of networks are important for day-to-day communication in organizations.60 No single network is likely to prove effective for a team or organization faced with a variety of tasks, problems, and goals. The apparently efficient, low-cost, and simple method of a superior instructing subordinates is likely to be ineffective if used exclusively. Dissatisfaction may become so great that members will leave the team or lose their motivation to contribute. Individuals and teams that face complex problems requiring a lot of discussion and coordination may deal with them ineffectively because of this top-down pattern. Leaders must consider trade-offs or opportunity costs. The overuse of formal meetings results in members becoming bored and dissatisfied with them. They often simply come to feel that their time is being wasted. Employees may spend too much time on a problem and its solution with excessive use of formal meetings. Hence, leaders should use the level of networking that is most appropriate to the specific goals and tasks. Major organizational changes typically require the use of all types of networks— electronic, informal, and formal employee networks. One of the key leadership challenges is in creating vision so that these networks are reasonably consistent with and reinforce each other. The following Change Competency feature emphasizes the importance of leadership in creating employee networks and introducing information technologies to bring about a major turnaround at CSX.61 CSX has a 21,000-routemile rail network that serves 23 states and two Canadian provinces. It operates an average of 1,200 trains per day with a fleet of 3,800 locomotives and 110,000 freight cars. CSX is headquartered in Jacksonville, Florida, and has 30,000 employees.62 The change and communication competencies of Michael J. Ward, the chairman and CEO of CSX, were key ingredients in the turnaround at CSX. He was recognized for his leadership by Railway Age as the 2009 Railroader of the Year. Change competency Michael Ward’s Reflections on CSX’s One Plan Redesign Upon becoming CEO, we outlined some real core values that we had to believe in as a company. They’re very basic to our business and very appropriate for our company. People make a difference. It starts with the customer. Safety is a way of life. Be fact-based. Get the right results the right way. One of the things I’m actually the proudest of is our One Plan Redesign, which looked at our entire scheduled merchandise, automotive and intermodal networks. We needed to put consistency into the plan and operate in a disciplined manner so that we could give our customers the kind of service they require. When we first rolled One Plan out, it really worked well for a couple of quarters. All of our key measures started improving. The customers were satisfied 279 Part 3 Leadership and Team Behaviors DMAC/ALAMY 280 CSX train. and we thought, wow, this is really a good program. Then, all of a sudden, we stopped paying attention. All those great improvements went by the wayside. I’m really proud of what we did then. Traditionally, we would have come out with a new program. But we said, no, we’re going to do the One Plan and we are going to do it right. So we went back and we examined what some of the issues were. One of them was that the locomotive plan was not adequately matched up and networked with the train operating plan. We made those improvements. We rolled out the One Plan again, and ever since then, it’s been working well and we continue to improve it. On the operating plan itself, we’re actually doing a redesign, if you will, a rerunning of our One Plan. It’s a several-month process because it’s a very complicated computer model that looks at all the traffic demands and how to best “build” the trains. It isn’t just a computerized, headquarters-originated process. We take the preliminary results and go out to the field personnel. We say, this is what we think you should or could be able to do; do you agree with this? Many times the local personnel will have some refinements. Sometimes they’ll change what that recommendation is and will improve it and make it more executable. We want to make sure it’s not just an exercise in computer modeling. It needs to be something that people feel like they can execute on a day-in, day-out basis. It takes a couple of iterations to get it refined properly, and we’re in the process of doing that as well. We recently implemented a new dispatch system. Before, everything was centrally decided in Jacksonville, Florida. The new dispatch system is much more portable and flexible. There’s real value in having dispatching close to the actual operations. It’s my view that having the dispatcher closer to the operations is actually very beneficial. They get to know the people, they get to know the territory better. This makes it less of a video game, realizing that there are physical locations, there are sidings, and understanding the ebbs and flows. Having dispatchers closer to the field operating people is much more effective. To learn more about CSX, go to www.csx.com. Impacts of E-Mail E-mail impacts individuals, informal groups, and formal employee networks as well as interpersonal communications throughout the organization. Just as face-to-face meetings can be overused and misused in organizations, so too can e-mail. The average manager receives over 250 e-mails a week. The potential perils of e-mail are greater than many assume. Research suggests that less than 50 percent of users grasp the tone or intent of an e-mail. Moreover, most people vastly overestimate their ability to relay and comprehend e-mail messages accurately. Misinterpretation is highest when the e-mail comes from the person’s manager.63 E-mail is different from a live conversation in two important ways: First, the individual cannot modify the content of a message based on the nonverbal reactions of the other party. Second, e-mails are permanent documents. Once sent, an e-mail can’t be taken back and the sender loses all control over who views the message. Unfortunately, the permanent nature of e-mail often is forgotten in the hubbub of everyday communications and can come back to haunt the sender in unanticipated ways. Chapter 9 Interpersonal Communication in Organizations Three major challenges have been identified with the use of e-mail: First and foremost, e-mails lacks cues like facial expression and tone of voice. That makes it difficult for recipients to decode meaning. Second, the prospect of instantaneous communication creates an urgency that pressures e-mailers to think and write quickly, which can lead to carelessness in grammar, spelling, and tone. Third, the inability to develop personal rapport over an e-mail makes relationships fragile in the face of conflict.64 In effect, e-mail cannot adequately convey emotion. When it does, unintended emotions are often received. The sender may soon wish the message sent could be retrieved or revised. Recall how Julia Stewart in the opening Learning from Experience feature felt about e-mail: She uses it, but says voice mail works best for her because she finds e-mail to be stale and impersonal. The emotional dimension conveyed thru e-mail has been termed e-body language by one author.65 E-body language is primarily conveyed in three main areas: tone, timing, and tension. Tone How the person structures and phrases e-mails can play a large part in how they are interpreted. For example, the overuse of personal pronouns—I, me, my—makes the writer sound parochial or egotistical. Too much use of the words we and they signals a competitive atmosphere. Overuse of exclamation points, sentences in all caps and bold font, and messages marked “high importance” when that is not really so are pitfalls associated with using e-mail. These practices can easily create unintended tones and related reactions. Timing Because people open e-mail messages at different times, a person might reply to a message that has been superseded by another, leading to confusion. Sometimes e-mail messages arrive with an expected quick reply when the recipient is in an overload situation. In a recent survey, one-quarter of the 7,800 responding managers reported being overwhelmed by their daily communications, especially through e-mail.66 Tension Interpersonal conflict may leave a bloody and ugly trail in e-mail communications. Outbursts of anger via e-mails usually make both parties look foolish, especially when individuals escalate the conflict into heated exchanges. The way to stop an online battle is to refrain from taking the bait. Don’t respond to the attack in kind. Acknowledge a difference of opinion, but don’t escalate the situation. Switching to a different form of communication will help avoid a trail of embarrassing messages.67 Chapter 13 explores approaches for managing conflict and negotiating effectively. Impacts of Text and Instant Messaging Text messaging allows short text messages, generally no more than a couple of hundred characters in length, to be sent and received on a mobile phone.68 Most phones and carriers also allow messages to be sent directly to an e-mail address. Outside of the United States, text messaging is more commonly known as SMS—short messaging service. Instant messaging, sometimes called mobile messaging, includes a variety of capabilities—such as chat, video, web links, streaming content, and file sharing—beyond texting.69 The use of text messaging in the United States began to explode in 2002, but was well under way in a number of other countries at that time. Text messaging, as many readers of this book know, started as a communication tool of the younger generation, but that is changing rapidly.70 A review of the new instant messaging innovations is beyond the scope of this discussion,71 however, the e-body language issues of e-mail also apply, for the most 281 282 Part 3 Leadership and Team Behaviors part, to text messaging. The increasing adoption of instant messaging as a business communication medium has been driven by employees, rather than through formal initiatives by the organization. This is changing. To date, the primary functions of instant messaging in the workplace include (1) quick (brief) questions and clarifications; (2) coordinating and scheduling day-to-day tasks; (3) coordinating impromptu social meetings, such as lunch or after-work “happy hours”; and (4) letting friends and family know of work-related schedule changes, such as being home early or late from work.72 As expected, instant and text messaging have the advantage of being more “real time” than e-mail. Gartner, headquartered in Stamford, Connecticut, is a leading provider of market research covering the information technology industry. David Smith, a senior research analyst at Gartner, comments: “Although consumer IM [instant messaging] use has been predominant, we expect penetration levels for enterprise grade IM to rise from around 25 percent currently to nearly 100 percent by 2011 or earlier. The business benefits that IM can bring are considerable. The ability to connect people in disparate locations by text, voice and video in one application is useful and is equally well suited to an informal ‘water cooler’ atmosphere as well as more formal group communications.”73 IM is increasingly being used as a vehicle for rapidly disseminating critical information to the entire enterprise, to groups of users, or to individuals in cases such as natural disasters, health issues, network outages, or schedule changes. In some cases, the IM network remains operational when phone or e-mail systems are down.74 Chapter Summary 1. Describe the core elements of interpersonal communication. 2. Explain the factors that foster ethical communications. 3. Diagnose nonverbal communication behaviors. The basic elements in the communication process—senders, receivers, transmitters, receptors, messages, channels, meaning, encoding, decoding, and feedback—are interrelated. Face-to-face interpersonal communication has the highest degree of information richness. An information-rich medium is especially important for performing complex tasks and resolving social and emotional issues that involve considerable uncertainty and ambiguity. Important issues usually contain significant amounts of uncertainty, ambiguity, and people-related (especially social and emotional) problems. There are many potential challenges to effective interpersonal communication. Direct barriers include aggressive communication approaches, noise, semantics, demeaning language, and lying and distortion. Through mastering the factors that constitute dialogue, the likelihood of engaging in ethical interpersonal communications is magnified. Dialogue includes communication openness, constructive feedback, appropriate self-disclosure, and active listening. Dialogue requires senders and receivers to play a dynamic role in the communication process. In open communication, senders and receivers are able to discuss, disagree, and search for understanding without resorting to personal attacks or hidden agendas. Feedback received from others provides motivation for individuals to learn and change their behaviors. How much individuals are willing to share with others depends on their ability to disclose information. By being an active listener, the receiver hears the whole message without interpretation or judgment. Nonverbal cues play a powerful role in supporting or hindering communications. There are many types of personal nonverbal cues. They were presented through the acronym PERCEIVE, which stands for the following terms: proximity, expressions, relative orientation, contact, eyes, individual gestures, voice, and existence of adapters. Formal organizational position is often tied to status. Status symbols—office size, the Chapter 9 Interpersonal Communication in Organizations 283 floor on which the office is located, number of windows, location of a secretary, and access to senior-level employees—all influence communication patterns. We noted some cautionary comments on the need to avoid simplistic stereotypes as to the meaning of nonverbal cues employed by an individual. To provide a sense of how much the interpersonal communication process can vary between cultures, we reviewed the concept of taarof in Iran. The barriers stemming from cultural differences are always present. They are more likely to be high when the interaction takes place between individuals from high-context and low-context cultures. We noted how certain nonverbal messages—the use of color, time, and gestures—can affect intercultural communications. 4. Understand the An individual’s communication network extends laterally, vertically, and externally. The development of a strong inside individual network can be determined by being able to respond “yes” to most of the eight questions presented in the chapter text, such as “Do I know a number of the people whose work relates to mine in any way beyond my own department?” For individual networking effectiveness, the individual needs political skill. The informal group network involves the pattern of multiple individual networks. The most common form of informal group network is the grapevine, which may take the pattern of a single-strand chain, gossip chain, probability chain, or cluster chain. The formal employee network focuses on the intended pattern of employee-related communication vertically and laterally. Leaders need to be proactive in creating an open and ethically based pattern to ensure that individual and employee group networks are not in conflict with the formal employee network, but are instead, for the most part, supportive of it. This network may be influenced and supported by a variety of information technologies. The potential impacts of e-mail as well as text and instant messaging technologies on interpersonal communication were reviewed. We focused on the overuse and misuse of e-mail. Of course, despite the limitations, e-mail, text messaging, and instant messaging are vital in today’s organizations and society. 5. Discuss the role importance of cultural and nonverbal barriers to communication. of communication networks. Key Terms and Concepts Active listening, 264 Assertive communication, 260 Channels, 256 Chromatics, 274 Chronemics, 274 Cue, 256 Cultural context, 271 Decoding, 257 Dialogue, 260 Distortion, 259 Encoding, 257 Ethnocentrism, 272 Feedback, 258 Formal employee network, 278 Grapevine, 278 High-context culture, 271 Impression management, 259 Intercultural communication, 270 Interpersonal communication, 254 Interpersonal communication network, 276 Language routines, 259 Low-context culture, 271 Lying, 259 Meaning, 257 Media richness, 256 Messages, 255 Meta-communication, 261 Monochronic time schedule, 274 Noise, 258 Nonverbal communication, 267 Political skill, 277 Polychronic time schedule, 275 Receptors, 255 Self-disclosure, 264 Semantics, 258 Taarof, 271 Text messaging, 281 360-degree feedback, 264 Transmitters, 255 284 Part 3 Leadership and Team Behaviors Discussion Questions 1. 2. 3. 4. 5. Visit DineEquity’s home page at www.dineequity.com. Click on “Corporate Governance,” then “DineEquity Policies on Business Conduct.” Read Julia Stewart’s statement and the section on “Conflicts of Interest.” Do you think these are effective statements on ethical business conduct? Explain. In what ways do the barriers to interpersonal communication interfere with your development of the diversity competency? Review the Change Competency on Susan Powers. What key attributes of the communication competency were used by Susan Powers and her team to achieve the changes at Travelport GDS? How would you assess the level of ethical interpersonal communication in an organization at which you are or have been employed? Give concrete examples that serve as the basis of your assessment. Based on your diagnosis of feedback practices you experienced in a current or previous job through the completion of the instrument in Table 9.1, which practices are least effective? How might they be improved? 6. Why is media richness important in interpersonal communication? Do changes need to be made in the pattern and frequency of use of the various media employed by the leadership in the organization for which you currently work or have worked? Explain. 7. Describe the common nonverbal cues used by someone you have worked for. Are they usually consistent or inconsistent with that person’s verbal expressions? Explain. 8. Describe your individual communication network at work or at school. Is it effective? Would you like to make any changes in it? Why or why not? 9. In what ways can you both agree and disagree with the following statement: “The Internet, e-mail, text messaging, and instant messaging are making it easier to communicate with people from different cultures.” Explain. 10. Review the Change Competency feature entitled “Michael Ward’s Reflections on CSX’s One Plan Redesign.” What factors that foster effective communications are illustrated in this feature? Explain. Experiential Exercise and Case Experiential Exercise: Communication Competency Communication Inventory75 The following statements relate to how your current or former manager and you communicate on the job. There are no right or wrong responses. Respond honestly to each statement using the following scale: Strongly Agree 1 _____ 1. _____ 2. _____ 3. _____ 4. _____ 5. _____ 6. _____ 7. _____ 8. Agree Uncertain Disagree 2 3 4 Strongly Disagree 5 My manager criticizes my work without allowing me to explain. My manager allows me as much creativity as possible in my job. My manager always judges the actions of his or her subordinates. My manager allows flexibility on the job. My manager criticizes my work in the presence of others. My manager is willing to try new ideas and to accept other points of view. My manager believes that he or she must control how I do my work. My manager understands the problems that I encounter in my job. _____ 9. _____ 10. _____ 11. _____ 12. _____ 13. _____ 14. _____ 15. _____ 16. _____ 17. _____ 18. _____ 19. _____ 20. My manager is always trying to change other people’s attitudes and behaviors to suit his or her own. My manager respects my feelings and values. My manager always needs to be in charge of the situation. My manager listens to my problems with interest. My manager tries to manipulate subordinates to get what he or she wants or to make himself or herself look good. My manager does not try to make me feel inferior. I have to be careful when talking to my manager so that I will not be misinterpreted. My manager participates in meetings with employees without projecting his or her higher status or power. I seldom say what really is on my mind because it might be twisted and distorted by my manager. My manager treats me with respect. My manager seldom becomes involved in employee conflicts. My manager does not have hidden motives in dealing with me. Chapter 9 Interpersonal Communication in Organizations _____ 21. My manager is not interested in employee problems. _____ 22. I feel that I can be honest and straightforward with my manager. _____ 23. My manager rarely offers moral support during a personal crisis. _____ 24. I feel that I can express my opinions and ideas honestly to my manager. _____ 25. My manager tries to make me feel inadequate. _____ 26. My manager defines problems so that they can be understood but does not insist that his or her subordinates agree. _____ 27. My manager makes it clear that he or she is in charge. _____ 28. I feel free to talk to my manager. _____ 29. My manager believes that if a job is to be done right, he or she must oversee it or do it. _____ 30. My manager defines problems and makes his or her subordinates aware of them. _____ 31. My manager cannot admit that he or she makes mistakes. _____ 32. My manager tries to describe situations fairly without labeling them as good or bad. _____ 33. My manager is dogmatic; it is useless for me to voice an opposing point of view. _____ 34. My manager presents his or her feelings and perceptions without implying that a similar response is expected from me. _____ 35. My manager thinks that he or she is always right. _____ 36. My manager attempts to explain situations clearly and without personal bias. 285 Place an X on the scale below to indicate what your perception is of your manager’s communication skills. 18 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Defensive Neutral Supportive Part II: Supportive Scores A. Provisionalism: Add point values for statements (2) ___ + (4) ___ + (6) ___ = _____ B. Empathy: Add point values for statements (8) ___ + (10) ___ + (12) ___ = _____ C. Equality: Add point values for statements (14) ___ + (16) ___ + (18) ___ = _____ D. Spontaneity: Add point values for statements (20) ___ + (22) ___ + (24) ___ = _____ E. Problem Orientation: Add point values for statements (26) ___ + (28) ___ + (30) ___ = _____ F. Description: Add point values for statements (32) ___ + (34) ___ + (36) ___ = _____ Subtotals for Supportive Scores A. Provisionalism _____ B. Empathy _____ C. Equality _____ D. Spontaneity _____ E. Problem Orientation _____ F. Description _____ Add subtotals for A thru F = _____ Place an X on the scale below to indicate what your perception is of your manager’s communication skills. 18 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Supportive Neutral Defensive Scoring and Interpretation Interpretation Place the numbers that you assigned to each statement in the appropriate blanks. Now add them to determine a subtotal for each communication category. Place the subtotals in the proper blanks and add your scores. You will note that low defensive scores in Part I indicate a high degree of defensiveness, whereas low supportive scores in Part II indicate a high degree of supportiveness. Part I: Defensive Scores A. Evaluation: Add point values for statements (1) ___ + (3) ___ + (5) ___ = _____ B. Control: Add point values for statements (7) ___ + (9) ___ + (11) ___ = _____ C. Strategy: Add point values for statements (13) ___ + (15) ___ + (17) ___ = _____ D. Neutrality: Add point values for statements (19) ___ + (21) ___ + (23) ___ = _____ E. Superiority: Add point values for statements (25) ___ + (27) ___ + (29) ___ = _____ F. Certainty: Add point values for statements (31) ___ + (33) ___ + (35) ___ = _____ Subtotals for Defensive Scores A. Evaluation _____ B. Control _____ C. Strategy _____ D. Neutrality _____ E. Superiority _____ F. Certainty _____ Add subtotals for A thru F = _____ Questions 1. Based on the assessment of your manager on the defensive scores (Part I), what suggestions and comments would you have for him or her if you were serving as a communication consultant to this individual? 2. Based on the assessment of your manager on the supportive scores (Part II), what suggestions and comments would you have for her or him if you were serving as a communication consultant to this individual? 3. Using the factors that foster ethical dialogue from Figure 9.3, what changes would you propose in your own communications with your manager? 286 Part 3 Leadership and Team Behaviors Case: Communication Competency Xographics76 Part A Xographics is a division of a large telecommunications company. Ellen Bohn, the vice president of production, had recently moved to Xographics from a firm where she had been the manager of a large office staff. The three managers reporting to Bohn at her new job all had 20 or more years of experience with Xographics. They had seen it go from an effective production division to one that was badly troubled with problem workers and poor performance. Shortly after her arrival, while talking with one of the managers, Bohn learned that many of them were upset because of the previous vice president’s insistence that employees report any machine breakdown to him or one of his assistants within 15 minutes of the breakdown. They felt that this didn’t give the employees the opportunity to repair the machine themselves. The manager told Bohn that the word was that once an employee had five breakdown reports, he or she was taken off the machine and given a lower paying job. Questions 1. What should Bohn do? 2. What other problems (unidentified by Bohn) might be present? 3. What additional steps might the managers take? Part B One of the major problems that Bohn faced was that only about 40 percent of the jobs listed for scheduled maintenance shutdowns were ever performed. During an informal conversation with Ken Viet, Xographics’ human resources manager, Bohn learned that the maintenance department was operating at about 60 percent efficiency. Viet said that the maintenance employees had recently staged a slowdown in order to force the company to increase their wages. Viet also told Bohn that maintenance employees usually quit about an hour early in order to wash up. The head of the maintenance department had worked his way up through the ranks. He started with Xographics immediately after graduation from high school and had been with the company for 25 years. His reason for the “inefficiency” was the lack of qualified maintenance people in the area, with the personnel department sending him individuals not qualified to maintain the mill’s machines. He didn’t have the time to train each newly hired employee, assigning this responsibility to other employees who had been around for a while. Questions (continued) 4. How might Bohn approach the head of maintenance? 5. Who else should Bohn talk to? Part C Two months after Bohn joined Xographics, the company held its annual picnic at a Six Flags park. Most of the employees and their families were there. Bohn saw Viet at the picnic and handed him a soft drink. The following conversation then took place. Viet: Hey, Ellen [Bohn], got a minute? Bohn: Sure, what’s up? Viet: Well, I was talking with one of your managers that I know pretty well. You know, an off-the-record chat about the company. Bohn: Yeah? Viet: He told me that the company’s management style is the mushroom style: Keep them in the dark and feed ’em a lot of manure. He said that nobody knew you were hired until you showed up at the plant. We heard that the guard didn’t even know who you were. Bohn: Yeah, I guess that’s so. Viet: This manager said that he has been doing his job for ten years and has never received any performance appraisal. His raises are just added into his check. No one has pointed out his strong and weak points. Bohn: Yeah, I guess that’s so. But, I’m not totally sure. You know that I’ve been here only a few months myself. Viet: Yeah, I know that, but listen to this. Tom Kerr, the new manager of industrial engineering, hasn’t talked to or even been introduced to anybody in the paper-machine area, and Tom has been on the job for three months. Bohn: Ken [Viet], how widespread do you think this feeling is about the mushroom style of management? Viet: I don’t know, Ellen, but I think you ought to find out if you want this place to produce. Questions (continued) 6. What steps can Bohn take? 7. What barriers to communication may exist? 8. What role has the company’s informal communication network played in this situation? chapter 10 Leadership Effectiveness: Foundations Learning Goals After studying this chapter, you should be able to: 1 Describe the role of power and political behavior in the leadership process. 2 Describe three legacy models of leadership: traits, Theory X/ Theory Y, and behavioral. 3 Explain and apply the Situational Leadership® Model. 4 Explain and apply the Vroom– Jago leadership model. Learning Content Learning from Experience Douglas Conant’s Leadership at Campbell Soup Co. Power and Political Behavior Change Competency Carol Bartz’s Use of Power to Change Yahoo! Legacy Leadership Models Self Competency Colin Powell’s “Lessons in Leadership” Situational Leadership® Model Communication Competency Paul Millman, CEO, Chroma Technology Vroom–Jago Leadership Model Ethics Competency The Bank CEO Experiential Exercise and Case Experiential Exercise: Self Competency Personal Power Inventory Case: Diversity Competency Women on Corporate Boards Learning from Experience Douglas Conant’s Leadership at Campbell Soup Co. MEL EVANS/AP PHOTO Douglas R. Conant was appointed president and chief executive officer of Campbell’s Soup Company in 2001. Campbell’s, headquartered in Camden, New Jersey, is a global manufacturer and marketer in 120 countries of simple foods such as soup, baked foods, frozen foods, and vegetable-based beverages. The company has approximately $8 billion in annual sales and a variety of brands, such as Campbell’s, Pepperidge Farm, Prego, Swanson, and V8. Its 190,000 employees are in various locations and its principal markets are in North America, Australia, France, Germany, and Belgium. Under Conant’s leadership, Campbell’s has reversed a decline in shareholder value and employee commitment. The company has made significant investments to improve product quality and packaging, strengthen the effectiveness of its marketing programs, and develop a strong innovation pipeline. Campbell’s also has improved its financial profile, enhanced its relationships with its customers, and consistently improved its employee satisfaction and commitment through investments in its organization. Conant did not shake up the firm through in-your-face control and domination. He readily gives others credit and deflects praise. Conant led the development of a 10-year plan, called the “Campbell’s Journey,” that is based on the concept of focused, mission-driven innovation. Broken down into three phases beginning in 2001, the first was the Transformation Plan from 2001 to To learn more about the Campbell Soup Company, go to www.campbellsoupcompany.com. 2004, the second was the Quality Growth Plan, and the last is the Building for Extraordinary Growth Plan from 2008 to 2010. A process is under way to develop a revised “Campbell’s Journey.” The mission is to build “the world’s most extraordinary food company,” which Conant equates to “a sustainably good company.” When Conant first assessed employee commitment, Campbell’s workforce ranked at the bottom when compared to other firms in a Gallup Organization sample. Conant set about reinvigorating the employees and firm through a variety of actions: • Using a personal touch. Conant has sent out more than 20,000 handwritten thank-you notes to employees, from the chief investment officer to the receptionist at headquarters. These notes are often found hanging 290 Part 3 • • Leadership and Team Behaviors in people’s offices or above their desks. “In business, we’re trained to find things that are wrong, but I try to celebrate what’s right,” says Conant. Setting expectations. All leaders must meet with direct reports each quarter to update their progress on clearly articulated goals. However, given the poor state of leadership at Campbell’s when he arrived, Conant led the process over a six-year period of replacing 300 of the company’s 350 managers. Half of the replacements were from within. Featuring communications. Every six weeks, Conant has lunch with a group of a dozen or so employees to listen to problems and get • • feedback. Conant knows he doesn’t have all the answers, admitting mistakes with a simple but meaningful “I can do better.” Developing professional opportunities and learning. Conant encourages movement among employees and led the creation of programs to develop a pipeline of talent. Conant is a serious student of leadershiprelated books. He even started a book club for top executives. Stimulating innovation. Conant knows that Campbell must keep developing new products and ideas to maintain its momentum. So he has focused on innovation, the lifeblood of any consumer packaged-goods company.1 The Learning from Experience feature provides a few insights into Douglas Conant’s effectiveness as a leader and what it means to be a leader. This and the following chapter further develop and expand on those insights. Leadership embraces the seven foundation competencies developed throughout this book, but it also goes beyond them. A team’s or organization’s success is greatly influenced by its leadership. Conant clearly reflects leadership qualities. In this chapter, we explore foundation concepts and models of leadership. First, we review the role of power and political behavior for managers and leaders. Second, we highlight three legacy leadership models. The third and fourth sections of this chapter present two recognized contingency models of leadership. Before reading further, it would be useful to review the section titled “Leadership versus Management” in Chapter 1. We stated that leadership is the process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behaviors, and making hard decisions about human and other resources. Management, on the other hand, emphasizes planning, control, rules and procedures, authority relations, and the like. We emphasized that not all managers are necessarily leaders. Learning Goal 1. Describe the role of power and political behavior in the leadership process. Power and Political Behavior All leaders use power and engage in political behaviors to influence others.2 True leaders do so effectively and ethically. Others in managerial roles, but who do not qualify as effective leaders, use power and political behavior in ways that are ineffective and counterproductive. We illustrate this in a variety of chapters, especially Chapter 2. Leaders’ Use of Power There are five important interpersonal sources of power—legitimate power, reward power, coercive power, referent power, and expert power—that leaders and others use in various situations.3 Leaders use these sources of power to influence followers Chapter 10 Leadership Effectiveness: Foundations 291 by appealing to one or more of their needs. Effective leadership depends as much on the acceptance of influence by the follower as on the leader’s providing it. Let’s review those sources of power in relation to the roles of leader and you as a follower. Legitimate Power Legitimate power is an individual’s ability to influence others’ behaviors because of the person’s formal position in the organization. You may respond to such influence because you acknowledge the leader’s legitimate right to tell you what to do. Nonmanagerial employees also may possess legitimate power. For example, when John Ogden was a safety inspector at Lockheed Martin Vought’s plant in Camden, Arkansas, he had the legitimate power to shut down production if there was a safety violation, even if the plant manager objected and tried to stop him. Legitimate power is an important concept. Typically, a manager is given the right to make decisions within a specific area of responsibility, such as customer service, quality control, marketing, or accounting. This area of responsibility defines the activities for which the manager (and sometimes other employees) can expect to exercise legitimate power to influence behavior. The further removed managers are from their specific areas of responsibility, the weaker their legitimate power becomes. You have a zone of indifference with respect to the exercise of power by your manager.4 The zone of indifference is an area within which employees will accept certain directives without questioning the leader’s power. The leader may have considerable legitimate power to influence your behavior. Outside that zone, however, legitimate power disappears rapidly. For example, an administrative assistant (male or female) may keystroke letters, answer the phone, open the mail, and do similar tasks for a manager (female or male) without question. However, if the manager asks the administrative assistant to go out for a drink after work, the assistant may refuse. The manager’s request clearly falls outside the assistant’s zone of indifference. The manager has no legitimate right to expect the assistant to comply. In the Learning from Experience feature, we reported on Douglas Conant’s use of legitimate power. As you will recall, over a six-year period, he replaced 300 of Campbell’s 350 managers. He led and approved resources for the creation of programs aimed at developing a pipeline of talent at Campbell’s. Reward power is an individual’s ability to influence others’ behaviors by providing them with valued things. To the extent that the employee values the rewards that the manager can give—praise, promotions, money, time off, and so on—the employee may comply with requests and directives. A manager who controls the allocation of merit pay raises in a department has reward power over employees in that department. Accordingly, the employees may comply with some attempts by the manager to influence their behavior because they expect to be rewarded for this compliance. Conant has sent out more than 20,000 handwritten thank-you notes to employees. They are often found hanging in people’s offices or above their desks. Conant stated: “In business, we’re trained to find things that are wrong, but I try to celebrate what’s right.” As the CEO, Conant has considerable reward power; including pay raises or bonuses, many of which he is permitted to award without approval by the board of directors. STOCKBYTE/GETTY IMAGES Reward Power Reward power is an individual’s ability to influence others’ behavior by providing valued talent. Rewards might include awards, praise, promotions, money, or time off. ▼ 292 Part 3 Leadership and Team Behaviors Coercive Power Coercive power is an individual’s ability to influence others’ behaviors by punishing them. For example, employees may comply with a manager’s directive because they expect to be punished if they fail to do so. Punishment may take the form of reprimands, undesirable work assignments, closer supervision, tighter enforcement of work rules, suspension without pay, and the like. Recall, however, that punishment can have undesirable side effects (see Chapter 5). For example, employees who receive an official reprimand for shoddy work may find ways to avoid punishment, such as by refusing to perform tasks, falsifying performance reports, or being absent frequently. Coercive power doesn’t necessarily encourage desired behavior, but it may stop or reduce undesirable behaviors. At times, leaders do need to exercise coercive power, which is based on their legitimate power. Demoting or dismissing subordinates for poor performance, unacceptable behaviors (e.g., sexual harassment, bullying, workplace violence), and the lack of integrity (e.g., lying, deceitful conduct, and the like) may require the use of coercive power. The 300 managers removed by Conant over a six-year period may have experienced his action as a form of punishment, but these actions were within his legitimate power to do so. He made replacements after careful assessment. Referent Power Referent power is an individual’s ability to influence others because they respect, admire, or like the person. For example, subordinates’ identification with a leader often forms the basis for referent power. This identification may include the desire by subordinates to be like the leader. A young manager might copy the style of an older, admired, and more experienced leader. The senior leader, thus, has some referent power to influence the younger manager’s behavior. Referent power usually is associated with individuals who possess admired personality characteristics, charisma, or a good reputation. It often is associated with political leaders, movie stars, sports figures, or other well-known individuals (hence, their use in advertising to influence consumer behavior). However, leaders and employees in business firms also may have considerable referent power because of the strength of their character and competencies. Conant has considerable referent power. Recall that he did not transform Campbell’s through in-your-face control and domination. He readily gives others credit and deflects praise. Recall that he has lunch with a group of a dozen or so employees to listen to problems and get feedback. Expert Power Expert power is an individual’s ability to influence others’ behaviors because of recognized competencies, talents, or specialized knowledge. To the extent that leaders can demonstrate their competencies, they will acquire expert power. However, expert power often is relatively narrow in scope. For example, an employee at Overhead Door Company might carefully follow the advice of the manager about how to program a garage door opener, yet ignore advice from the manager regarding which of three company health plans to select. In this instance, the employee recognizes expertise in one area while resisting influence in another. A lack of expert power often causes problems for new managers and employees. A junior accountant might possess a great deal of knowledge about accounting theory and procedures. This expertise must be correctly demonstrated and applied over time to be recognized and accepted. When Conant became the CEO of Campbell’s in 2001, he arrived with 25 years of food industry experience from three of the world’s leading food companies: General Mills, Kraft Foods, and Nabisco. Prior to joining Campbell’s, he was president of Nabisco Foods Co., where he led that firm to five consecutive years of double-digit Chapter 10 Leadership Effectiveness: Foundations 293 earnings growth. Upon arrival, he was recognized and accepted throughout Campbell’s as a person with considerable expertise for the CEO role.5 An effective manager who is also a leader—whether a first-line manager or top-level executive—uses a variety of sources of power. For successful leaders and organizations, the emphasis is on reward, referent, and expert power, with less reliance on coercive and legitimate power. Political Behavior in Organizations Political behavior involves attempts by individuals to influence the behaviors of others as a means to protect their self-interests, meet their own needs, and advance their own goals.6 Defined in this way, almost all behavior may be regarded as political. Labeling behavior as political, however, usually implies that certain people are gaining something at the expense of others or the organization as a whole. However, a balanced understanding of political behavior and its consequences is needed. People often are self-centered and biased when labeling actions as political behavior. Employees may justify their own political behavior as defending legitimate rights or interests. Some may say it’s “playing politics.” Organizational Politics Organizational politics involves actions by individuals, teams, or leaders to acquire, develop, and use power and other resources in order to obtain preferred outcomes.7 When people share power but differ about what must be done (e.g., invest in expanding in North America versus China), many decisions and actions quite naturally will be the result of a political process. Employees are often concerned about organizational politics.8 Many believe that an ideal work setting would be free from political behavior. Negative attitudes about political Self Insight behavior and organizational politics can hinder organizational Success is to be measured not so much by effectiveness. Examples of behaviors often seen as political are the position that one has reached in life as shown in Table 10.1. Employees tend to assume that politiby the obstacles which the individual has cal behavior doesn’t yield the best organizational decisions or overcome while trying to succeed. outcomes—that somehow, by pushing for their own positions, they cause inferior actions or decisions to be made. Although Booker T. Washington, Author, Up from Slavery, this result can occur, political behavior isn’t always detrimental and Civil Rights Leader to an organization. For example, a study involving managers in 30 organizations indicated that they were able to identify beneficial, as well as harmful, effects of political behavior.9 Beneficial effects included career advancement, recognition and status for individuals looking after their legitimate interests, and achievement of organizational goals— getting the job done—as a result of the normal political process in the organization. Harmful effects included demotions and loss of jobs for “losers” in the political process, a misuse of resources, and creation of an ineffective organizational culture. Organizational politics may arouse anxieties that cause employees to withdraw emotionally from the organization. Their withdrawal makes creating an organization characterized by high performance and high commitment very difficult. Political behavior, then, can meet appropriate and legitimate individual and organizational needs, or it can result in negative outcomes. In any event, leaders and employees must understand political behavior because it definitely does occur. Eliminating political behavior isn’t possible—it can only be influenced. Conant provides strong leadership to minimize the negative aspects of political behavior. To help bring employees together, he led the creation of a new mission for Campbell’s that states: “Together we will build the world’s most extraordinary food company by nourishing people’s lives everywhere, every day.” From this, a 294 Part 3 Leadership and Team Behaviors TABLE 10.1 Common Political Tactics Taking counsel The individual exercises great caution in seeking or giving advice. Maneuverability The individual maintains flexibility and never completely commits to any one position or program. Communication The individual never communicates everything. Instead information is withheld and/or at times it’s released carefully. Compromising The individual accepts compromise only as a short-term tactic, while continuing to press ahead with one’s own agenda. Confidence Once individuals make a decision, they must always give the impression of knowing what they are doing, even when they do not. Always the boss An atmosphere of social friendship limits the power of the leader; thus the leader always maintains a sense of distance and separation from subordinates. Source: Adapted from Buchanan, D., and Badham, R. Power, Politics, and Organizational Change. London: Sage 1999. “Success Model” was developed that states: “Our Success Model recognizes that to maximize shareowner value we need to ‘win in the workplace’ in order to ‘win in the marketplace,’ and we must do both with integrity.” The mission and Success Model are based on three core values that include statements on character, competence, and teamwork.10 Drivers of Political Behavior The probability of political behavior occurring typically increases in proportion to disagreements over goals, different ideas about the organization’s problems, different information about the situation, the need to allocate scarce resources, and so on.11 If these forces didn’t exist, perhaps political behavior would be minimal or wouldn’t exist. Results are never certain, resources are never infinite, and people must make difficult choices between competing goals and methods to attain them. Thus, political behavior will naturally occur as individuals, teams, and departments attempt to obtain their preferred outcomes. Leaders shouldn’t try to prevent the inevitable. Rather, they should try to ensure that these activities do not have negative consequences for the organization and its employees. Employees are more likely to act politically when (1) decision-making procedures and performance measures are uncertain and complex, and (2) competition for scarce resources is strong. Conversely, in less complex situations where decision-making processes are clear and competitive behavior is not rewarded, excessive political behavior is unlikely. Even though individual differences (e.g., attitudes, personality, needs, etc.) may contribute to political behavior, such behavior is typically more strongly influenced by aspects of the situation. Managers make political behavior more likely to occur when they provide a weak vision, mission, and values that reflect their own behaviors, for example, when they fail to “walk the talk.” Conant’s leadership is seen by the vast majority of employees and other stakeholders as reflecting a person who “walks the talk” and expects it of others as well. Ambiguous circumstances allow individuals to define situations in ways that satisfy their own needs and desires. Further, when employees focus on wanting more resources (e.g., equipment, promotions, pay raises, or office space) than are available, political behavior may be more likely to occur. Chapter 10 Leadership Effectiveness: Foundations Political behavior is greater when managers reward it. A reward system may focus solely on individual accomplishment and minimize team contributions. When that’s the case, individuals may be tempted to behave politically to ensure that they receive much more of the rewards than other team members. If their actions result in more rewards, employees are even more likely to engage in such political actions in the future. Similarly, individuals who had avoided political behavior may start behaving politically when they observe such behavior being rewarded by managers. In sum, the organizational reward system can be a significant factor in the occurrence of political behavior. Insights for Leaders The performance appraisal process provides a good example of a situation in which managers may encourage political behavior among employees. Performance for employees in many departments—accounting, human resources, quality control, legal, information systems, and so on—isn’t easily measured. Thus, the process used by managers results in the allocation of scarce resources (pay, bonuses, benefits, etc.) based on complex subjective criteria as opposed to objective criteria (e.g., sales).12 Some managers ignore the existence of politics in the appraisal process or may assume that the use of a quantitative performance appraisal method (e.g., number of units sold, downtime, wastes) will minimize it. But political behavior is a fact of life in the appraisal process. In particular, because of the ambiguous nature of managerial work, appraisals of managers by higher level leaders are susceptible to political manipulation. What is the risk, ethical or otherwise, of using performance appraisal as a political tool? Among other things, political performance appraisals by managers can • undermine organizational goals and performance, • compromise the link between performance and rewards, • increase political behavior in other organizational processes and decisions, and • expose the organization to litigation if employees are terminated.13 Leaders tend to adopt the following behaviors to help reduce the problem of politically based performance appraisals: • Develop goals and standards that are as clear and specific as possible. • Link specific actions and performance results to rewards. • Conduct structured, professional reviews, including specific examples of observed performance and explanations for ratings given. • Offer performance feedback on an ongoing basis, rather than just once a year. • Acknowledge that the potential for politics in performance appraisals exists and make this topic a focus of ongoing discussions throughout the organization.14 The following Change Competency reports on the change efforts of Carol Bartz to lead Yahoo! out of the internal power struggles and political turmoil that had become prominent by the time of her appointment as CEO in early 2009.15 This feature provides examples of how Bartz effectively used her power to achieve the desired results. Bartz serves on several corporate boards and had been a successful chairman, CEO, and president of Autodesk, Inc., a major provider of design and engineering software. The success of her use of power and change initiatives at Yahoo! is not likely to be known for several years. Yahoo!, which is an acronym for Yet Another Hierarchical Officious Oracle, is an online portal that draws more than 400 million to its network of websites and other services. Yahoo! publishes online content in 20 languages and has approximately 13,000 employees. It is headquartered in Sunnyvale, California.16 295 296 Part 3 Leadership and Team Behaviors Change competency Carol Bartz’s Use of Power to Change Yahoo! In February 2009, Carol Bartz announced a reorganization of Yahoo! Excerpts from her blog post follow. A month and a half in the saddle and today I have the perfect excuse to get blogging. I’ve been on a whirlwind tour for the last six weeks, talking with everybody from executive leaders to the guys who configured my laptop. I’ve been in student mode, slowly getting smarter about what makes this place tick. And most recently, I’ve been gathering information on what it’s going to take to get Yahoo! to a great place as an organization—and one that brings you killer products. People here have impressed the hell out of me. They’re smart, dedicated, passionate, driven, and really nice. There’s so much great energy and frankly lots of optimism. But there’s also plenty that has bogged this company down. For starters, you’d be amazed at how complicated some things are here. So today, I’m rolling out a new management structure that I believe will make Yahoo! a lot faster on its feet. For us working at Yahoo!, it means everything gets simpler. We’ll be able to make speedier decisions, the notorious silos are gone, and we have a renewed focus on the customer. For you using Yahoo! every day, it will better enable us to deliver products that make you say, “Wow.” I’ve noticed that a lot of us on the inside don’t spend enough time looking to the outside. That’s why I’m creating a new Customer Advocacy Group. After getting a lot of angry calls at my office from frustrated customers, I realized we could do a better job of listening to and supporting you. Our Customer Care team does an incredible job with To learn more about Yahoo!, go to www.yahoo.com. the amazing number of people who come to them, but they need better resources. So we’re investing in that. After all, you deserve the very best. We’re also leaning on this team to make sure we’re all hearing the voice of our customers (consumers and advertisers). I’m singularly focused on providing you with awesome products. Period. The kind that gets you so excited, you have to tell someone about them. Whether on your desktop, your mobile device, or even your TV. The new management organization has all major executives reporting directly to Bartz, who lamented in her blog post that there’s “plenty that has bogged this company down.” “It looks like she isn’t afraid to go in with a chain saw,” said Kevin Lee, CEO of search marketing firm Didit. Bartz has reorganized the company into two regions— North American and international—compared to four in the past. People in mobile and product development now report directly to Bartz to emphasize their increased level of accountability. A number of people noted that the new organization is a vast improvement over the previous “matrix management” system that handed multiple executives oversight over many products and new projects. That led to slow decision making and little accountability, Yahoo! insiders say. By most accounts, the swing to strong line authority is the right move for Yahoo! after so many years of decentralized product groups around the world, each with their own engineering and other functions. Yahoo! has an “inability to stop doing good things that don’t fit with their strategy,” says Robert Sutton, a professor of management science and engineering at Stanford University. That will change under Bartz’s leadership. Chapter 10 Leadership Effectiveness: Foundations Legacy Leadership Models The traits, Theory X/Theory Y, and behavioral models are probably the most basic, oldest, and well known of the leadership models. The more recent and complex leadership models often draw on parts of these three models. Thus, these three models provide an important legacy to the contingency leadership models and the contemporary leadership literature in general. Traits Model of Leadership The traits model of leadership is based on characteristics of many leaders—both successful and unsuccessful—and is used to predict leadership effectiveness. The resulting lists of traits are then compared to those of potential managers to assess their likelihood of success or failure as leaders. There is some support for the notion that successful leaders have interests and abilities and, perhaps, even personality traits that are different from those of less effective leaders. Key Traits Some evidence suggests that four traits are shared by most (but not all) successful leaders: • Intelligence. Successful leaders tend to have somewhat higher intelligence than their subordinates. • Maturity and breadth. Successful leaders tend to be emotionally mature and have a broad range of interests. • Achievement drive. Successful leaders are results oriented; when they achieve one goal, they seek another. They do not depend primarily on employees for their motivation to achieve goals. • Integrity. Successful leaders, over the long term, usually have integrity. When individuals in leadership positions state one set of values but practice another set, followers quickly see them as untrustworthy. Many surveys show that honesty is the key attribute when employees are asked to rank and comment on the various traits of successful and unsuccessful leaders. Trust is crucial and translates into the degree of willingness by employees to follow leaders. Confusion over the leader’s thinking and values creates negative stress, indecision, and personal politics.17 Insights for Leaders The traits model of leadership is inadequate for successfully predicting leadership effectiveness for at least three reasons.18 First, in terms of personality traits, there are no consistent patterns between specific traits or sets of traits and leadership effectiveness. More than 100 different traits of successful leaders in various managerial positions have been identified. For example, the traits pattern of successful leaders of salespeople includes optimism, enthusiasm, and dominance. The traits pattern of successful leaders of production workers usually includes being progressive, introverted, and cooperative. These descriptions are simply generalities. Many successful leaders of salespeople and production workers do not have all, or even some, of these characteristics. There also is often disagreement over which traits are the most important to be an effective leader. The second limitation of the traits model is that it often attempts to relate physical traits—such as height, weight, appearance, physique, energy, and health—to effective leadership. Most of these factors, however, are related to situational factors that can have a significant impact on a leader’s effectiveness. For example, people in the military or law enforcement must be a particular minimum height and weight in order to perform certain tasks well. Although these traits may help an individual rise to a leadership 297 Learning Goal 2. Describe three legacy models of leadership: traits, Theory X/Theory Y, and behavioral. 298 Part 3 Leadership and Team Behaviors position in such organizations, neither height nor weight correlates highly with effective leadership. In business and other organizations, height and weight generally play no role in performance and, thus, are not requirements for a leadership position. The third limitation of the traits model is that leadership itself is complex. A relationship between specific traits and a person’s interest in particular types of jobs could well exist, which a study relating personality and effectiveness might not identify. The traits approach paints a somewhat fatalistic picture, suggesting that some people, merely because of their traits, are destined not to be effective leaders. Theory X and Theory Y Model The behavior of managers is often influenced by their assumptions and beliefs about followers and what motivates their followers. Thus, differences in the behaviors of managers can be understood by looking at the different assumptions they make. One of the most widely cited and recognized models for describing differences in these assumptions was developed by Douglas McGregor in 1957. He coined the labels “Theory X” and “Theory Y” as a way to contrast two sets of assumptions and beliefs held by managers. Theory X and Theory Y managers both understand that they are responsible for the resources in their units—money, materials, equipment, and people—in the interest of achieving organizational goals. What sets them apart are their propositions about what motivates their subordinates and what are the best ways to carry out leadership responsibilities.19 Before proceeding, take a few minutes to respond to the propositions in Table 10.2. TABLE 10.2 Theory X/Theory Y Propositions Instrument Indicate your degree of agreement or disagreement with each o
